Item 9A. Controls and Procedures
Item 9A. Controls and Procedures
As of the end of the period covered by this Annual Report on Form 10-K, our management carried out an evaluation, under the supervision and with the participation of our Managing Trustees, our President and Chief Investment Officer and our Chief Financial Officer and Treasurer, of the effectiveness of our disclosure controls and procedures pursuant to Rules 13a-15 and 15d-15 under the Exchange Act. Based upon that evaluation, our Managing Trustees, our President and Chief Investment Officer and our Chief Financial Officer and Treasurer concluded that our disclosure controls and procedures are effective.
There have been no changes in our internal control over financial reporting during the quarter ended December 31, 2024 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Management Report on Assessment of Internal Control Over Financial Reporting
We are responsible for establishing and maintaining adequate internal control over financial reporting. Our internal control system is designed to provide reasonable assurance to our management and Board of Trustees regarding the preparation and fair presentation of published financial statements. All internal control systems, no matter how well designed, have inherent
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limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, it used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in Internal Control—Integrated Framework (2013) . Based on this assessment, we believe that, as of December 31, 2024, our internal control over financial reporting is effective.
Deloitte & Touche LLP, the independent registered public accounting firm that audited our 2024 consolidated financial statements included in this Annual Report on Form 10-K, has issued an attestation report on our internal control over financial reporting. The report appears elsewhere herein.
Item 9B. Other Information
During the three months ended December 31, 2024, none of our Trustees or officers adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.
Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections
Not applicable.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
We have a Code of Conduct that applies to our officers and Trustees. Our Code of Conduct is posted on our website, www.svcreit.com. A printed copy of our Code of Conduct is also available free of charge to any person who requests a copy by writing to: Secretary, Service Properties Trust, Two Newton Place, 255 Washington Street, Suite 300, Newton, MA 02458-1634. We intend to satisfy the requirements under Item 5.05 of Form 8-K regarding disclosure of amendments to, or waivers from, provisions of our Code of Conduct that apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions, on our website.
We have adopted comprehensive insider trading policies and procedures that apply to trustees, directors, officers and employees, as applicable, of us and RMR. These policies are designed to prevent trading on the basis of material nonpublic information and to ensure compliance with applicable securities laws. The policies include provisions for pre-clearance of trades, blackout periods and the establishment of Rule 10b5-1 trading plans. A copy of our insider trading policy is filed as an exhibit to this Annual Report on Form 10-K.
The remainder of the information required by Item 10 is incorporated by reference to our definitive Proxy Statement.
Item 11. Executive Compensation
The information required by Item 11 is incorporated by reference to our definitive Proxy Statement.
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Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Equity Compensation Plan Information. We may grant common shares to our officers, other employees of RMR and officers or employees of Sonesta under our Amended and Restated 2012 Equity Compensation Plan, or the 2012 Plan. In addition, each of our Trustees receives common shares as part of his or her annual compensation for serving as a Trustee and such shares are awarded under the 2012 Plan. The terms of awards made under the 2012 Plan are determined by the Compensation Committee of our Board of Trustees at the time of the award. The following table is as of December 31, 2024:
Plan category Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights Weighted-average
exercise price of
outstanding options,
warrants and rights Number of securities
remaining available for
future issuance under
equity compensation plans (excluding securities reflected in column (a))
(a) (b) (c)
Equity compensation plans approved by securityholders — 2012 Plan None. None. 217,189 (1)
Equity compensation plans not approved by securityholders None. None. None.
Total None. None. 217,189 (1)
(1) Consists of common shares available for issuance pursuant to the terms of the 2012 Plan. Share awards that are repurchased or forfeited will be added to the common shares available for issuance under the 2012 Plan.
Payments by us to our officers, other employees of RMR and officers or employees of Sonesta are described in Notes 7 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K. The remainder of the information required by Item 12 is incorporated by reference to our definitive Proxy Statement.
Item 13. Certain Relationships and Related Transactions, and Director Independence
The information required by Item 13 is incorporated by reference to our definitive Proxy Statement.
Item 14. Principal Accountant Fees and Services
The information required by Item 14 is incorporated by reference to our definitive Proxy Statement.
PART IV
Item 15. Exhibits and Financial Statement Schedules
(a) Index to Financial Statements and Financial Statement Schedules
The following consolidated financial statements and financial statement schedule and notes of Service Properties Trust are included on the pages indicated:
Page
Reports of Deloitte & Touche LLP, Independent Registered Public Accounting Firm (PCAOB ID No. 34 )
F- 1
Consolidated Balance Sheets as of December 31, 2024 and 2023
F-4
Consolidated Statements of Comprehensive Income (Loss) for each of the three years in the period ended December 31, 2024
F-5
Consolidated Statements of Shareholders’ Equity for each of the three years in the period ended December 31, 2024
F-6
Consolidated Statements of Cash Flows for each of the three years in the period ended December 31, 2024
F-7
Notes to Consolidated Financial Statements
F-9
Schedule III - Real Estate and Accumulated Depreciation as of December 31, 2024
S- 1
Notes to Schedule III
S-6
All other schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are inapplicable, and therefore have been omitted.
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Significant Tenant
TA, an indirect subsidiary of BP p.l.c., or BP Parent, is the lessee of 28.7 % of our real estate properties, at historical cost, as of December 31, 2024. BP Corporation North America Inc. guarantees payment under each of the leases with TA, subject to a cap.
Financial information about BP Corporation North America Inc. may be found on the SEC’s website by entering BP Parent’s name at http://www.sec.gov/edgar/searchedgar/companysearch.html. Reference to BP Parent’s financial information on this external website is presented to comply with applicable accounting regulations of the SEC. Except for such financial information contained therein as is required to be included herein under such regulations, BP Parent’s public filings and other information located in external websites are not incorporated by reference into these financial statements. See Notes 4, 5 and 9 to our consolidated financial statements included in Part IV, Item 15 of this Annual Report on Form 10-K for further information relating to our leases with TA.
(b) Exhibits
Exhibit Number Description
3.1 Composite Copy of Amended and Restated Declaration of Trust, dated as of August 21, 1995, as amended to date. (Incorporated by reference to the Company’s Post-Effective Amendment No. 2 to Registration Statement on Form S-3, filed on July 15, 2020, File No. 333-226944.)
3.2 Articles Supplementary to the Declaration of Trust of the Company, dated June 10, 2020. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 10, 2020.)
3.3 Third Amended and Restated Bylaws of the Company, adopted effective June 14, 2024. (Incorporated by reference to the Company's Current Report on Form 8-K filed on June 17, 2024.)
4.1 Form of Common Share Certificate. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.)
4.2 Indenture, dated as of February 3, 2016, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association). (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 4, 2016.)
4.3 Second Supplemental Indenture, dated as of February 3, 2016, between the Company and U.S. Bank National Association, relating to the Company’s 5.25% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 4, 2016.)
4.4 Third Supplemental Indenture, dated as of January 13, 2017, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 4.950% Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.)
4.5 Fourth Supplemental Indenture, dated as of October 26, 2017, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 3.950% Senior Notes due 2028, including form thereof. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.)
4.6 Fifth Supplemental Indenture, dated as of February 2, 2018, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 4.375% Senior Notes due 2030, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2017.)
4.7 Seventh Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 4.750% Senior Notes due 2026, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2019.)
4.8 Eighth Supplemental Indenture, dated as of September 18, 2019, between the Company and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 4.950% Senior Notes due 2029, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on September 18, 2019.)
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4.9 Tenth Supplemental Indenture, dated as of November 20, 2020, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 5.50% Senior Notes due 2027, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.)
4.10 Supplemental Indenture, dated as of January 29, 2021, among the Company, SVC Gatehall Drive TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2021.)
4.11 Supplemental Indenture, dated as of July 8, 2021, among the Company, SVCN 1 LLC, SVCN 4 LLC and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)
4.12 Supplemental Indenture, dated as of October 28, 2021, among the Company, SVC Minneapolis TRS LLC and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)
4.13 Supplemental Indenture, dated as of July 27, 2023, among the Company, HPTWN Properties Trust, Highway Ventures Properties Trust, Highway Ventures Properties LLC, HPT TA Properties LLC and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
4.14 Supplemental Indenture, dated as of April 4, 2024, among the Company, SVC Higgins Road TRS LLC, SVC Mannheim Road TRS LLC, and U.S. Bank Trust Company, National Association (as successor in interest to U.S. Bank National Association), relating to the Company’s 5.50% Senior Notes due 2027. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.)
4.15 Eleventh Supplemental Indenture, dated as of June 3, 2024, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank Trust Company, National Association, relating to the Company’s 8.375% Senior Guaranteed Unsecured Notes due 2029, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 3, 2024.)
4.16 Twelfth Supplemental Indenture, dated as of June 3, 2024, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank Trust Company, National Association, relating to the Company’s 8.875% Senior Guaranteed Unsecured Notes due 2032, including form thereof. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 3, 2024.)
4.17 Indenture, dated as of November 16, 2023, among the Company, certain subsidiaries of the Company named therein as guarantors and U.S. Bank Trust Company, National Association, relating to the Company’s 8.625% Senior Secured Notes due 2031, including form thereof. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.)
4.18 Supplemental Indenture, dated as of April 4, 2024, among the Company, SVC Higgins Road TRS LLC, SVC Mannheim Road TRS LLC, and U.S. Bank Trust Company, National Association, relating to the Company’s 8.625% Senior Notes due 2031. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.)
4.19 Registration Rights and Lock-Up Agreement, dated as of June 5, 2015, among the Company, ABP Trust (f/k/a Reit Management & Research Trust) and Adam D. Portnoy. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 8, 2015.)
4.20 Description of Securities. (Filed herewith.)
8.1 Opinion of Sullivan & Worcester LLP as to certain tax matters. (Filed herewith.)
10.1 Second Amended and Restated Business Management Agreement, dated as of June 5, 2015, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 8, 2015.)
10.2 First Amendment to Second Amended and Restated Business Management Agreement, effective as of August 1, 2021, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2021.)
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10.3 Third Amended and Restated Property Management Agreement, dated as of June 22, 2021, between the Company and The RMR Group LLC. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2021.)
10.4 Service Properties Trust Amended and Restated 2012 Equity Compensation Plan. (+) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on June 16, 2022.)
10.5 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2020.)
10.6 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2022.)
10.7 Form of Share Award Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.)
10.8 Form of Indemnification Agreement. (+) (Incorporated by reference to the Company’s Quarterly Report on Form 10- Q for the quarter ended June 30, 2023.)
10.9 Third Amended and Restated Credit Agreement, dated as of June 29, 2023, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other institutions party thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 6, 2023.)
10.10 Incremental Revolving Commitment Assumption Agreement, dated as of July 5, 2023, among the Company, certain of its subsidiaries party thereto, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other institutions party thereto. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 6, 2023.)
10.11 First Amendment to Third Amended and Restated Credit Agreement, dated as of November 3, 2023, among the Company, Wells Fargo Bank, National Association, as Administrative Agent, and each of the other institutions party thereto. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.)
10.12 Second Amendment to Third Amended and Restated Credit Agreement, dated as of October 23, 2024, among the Company, Wells Fargo Bank, National Association, as administrative agent, and each of the other institutions party thereto. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.)
10.13 Third Amendment to Third Amended and Restated Credit Agreement, dated as of February 2 5 , 2025, among the Company, Wells Fargo Bank, National Association, as administrative agent, and each of the other institutions party thereto. (Filed herewith.)
10.14 Amended and Restated Pledge Agreement, dated as of June 29, 2023, between the Company, certain of its direct and indirect subsidiaries and Wells Fargo Bank, National Association. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on July 6, 2023.)
10.15 Release of Certain Guarantors, dated as of September 28, 2023, by U.S. Bank Trust Company, National Association (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2023.)
10.16 Transaction Agreement, dated as of February 27, 2020, between Sonesta Holdco Corporation and the Company. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.)
10.17 Stockholders Agreement, dated as of February 27, 2020, by and among Sonesta Holdco Corporation, the Company, SVC Holdings LLC, Adam D. Portnoy and Diane Portnoy, as trustee of the Diane Portnoy 2019 Revocable Trust under agreement dated May 28, 2019. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.)
10.18 Representative Form of Amended and Restated Management Agreement among Sonesta International Hotels Corporation, Cambridge TRS, Inc., HPT CY TRS, Inc., HPT TRS IHG-2, Inc. and HRP TRS MRP, Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022.) (Updated schedules thereto filed herewith.) (Schedule of applicable agreements incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2024.)
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10.19 Amended, Restated and Consolidated Pooling Agreement, dated as of January 1, 2022, among Sonesta International Hotels Corporation, certain subsidiaries of the Company named therein as owners and certain subsidiaries of Sonesta International Hotels Corporation named therein as managers. (Retained Hotels) (Incorporated by reference to the Company’s Current Report on Form 8-K filed on January 10, 2022). (Updated schedules thereto filed herewith.)
10.20 Third Amended and Restated Lease Agreement No. 1, dated as of May 15, 2023, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.21 First Amendment to Third Amended and Restated Lease Agreement No. 1, dated as of February 28, 2024, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2024.)
10.22 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Third Amended and Restated Lease Agreement No. 1). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.23 Third Amended and Restated Lease Agreement No. 2, dated as of May 15, 2023, among HPT TA Properties Trust, HPT TA Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.24 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of HPT TA Properties Trust and HPT TA Properties LLC (relating to Third Amended and Restated Lease Agreement No. 2). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.25 Third Amended and Restated Lease Agreement No. 3, dated as of May 15, 2023, between SVC HYB Lease Pool 3 LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.26 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of SVC HYB Lease Pool 3 LLC (relating to Third Amended and Restated Lease Agreement No. 3). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.27 Third Amended and Restated Lease Agreement No. 4, dated as of May 15, 2023, between SVC HYB Lease Pool 4 LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.28 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of SVC HYB Lease Pool 4 LLC (relating to Third Amended and Restated Lease Agreement No. 4). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.29 Second Amended and Restated Lease Agreement No. 5, dated as of May 15, 2023, among Highway Ventures Properties Trust, Highway Ventures Properties LLC and TA Operating LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.30 Second Amended and Restated Guaranty Agreement, dated as of May 15, 2023, by BP Corporation North America Inc. for the benefit of Highway Ventures Properties Trust and Highway Ventures Properties LLC (relating to Second Amended and Restated Lease Agreement No. 5). (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
10.31 Consent and Amendment Agreement, dated as of February 15, 2023, among the Company, HPT TA Properties Trust, HPT TRS Inc., HPT TA Properties LLC, Highway Ventures Properties Trust, Highway Ventures Properties LLC, TravelCenters of America Inc., TA Operating LLC and BP Products North America Inc. (Incorporated by reference to the Company’s Current Report on Form 8-K filed on February 21, 2023.)
19.1 Service Properties Trust Insider Trading Policies and Procedures. (Filed herewith.)
21.1 Subsidiaries of the Company. (Filed herewith.)
22.1 List of Subsidiary Guarantors. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2024.)
23.1 Consent of Deloitte & Touche LLP. (Filed herewith.)
23.2 Consent of Sullivan & Worcester LLP. (Contained in Exhibit 8.1.)
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31.1 Rule 13a-14(a) Certification. (Filed herewith.)
31.2 Rule 13a-14(a) Certification. (Filed herewith.)
31.3 Rule 13a-14(a) Certification. (Filed herewith.)
31.4 Rule 13a-14(a) Certification. (Filed herewith.)
32.1 Section 1350 Certification. (Furnished herewith.)
97.1 Service Properties Trust Clawback Policy. (Incorporated by reference to the Company's Annual Report on Form 10-K for the year ended December 31, 2023.)
99.1 Registration Rights Agreement, dated as of February 27, 2020, among Sonesta Holdco Corporation, the Company and SVC Holdings LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020.)
99.2 Letter Agreement, dated as of February 10, 2023, among the Company and The RMR Group LLC. (Incorporated by reference to the Company’s Annual Report on Form 10-K for the year ended December 31, 2022.)
99.3 Letter Agreement, dated as of May 1, 2023, between the Company and The RMR Group LLC. (Incorporated by reference to the Company’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2023.)
101.INS XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH XBRL Taxonomy Extension Schema Document. (Filed herewith.)
101.CAL XBRL Taxonomy Extension Calculation Linkbase Document. (Filed herewith.)
101.DEF XBRL Taxonomy Extension Definition Linkbase Document. (Filed herewith.)
101.LAB XBRL Taxonomy Extension Label Linkbase Document. (Filed herewith.)
101.PRE XBRL Taxonomy Extension Presentation Linkbase Document. (Filed herewith.)
104 Cover Page Interactive Data File. (Formatted as Inline XBRL and contained in Exhibit 101.)
(+) Management contract or compensatory plan or arrangement.
As permitted by Item 601(b)(4)(iii)(A) of Regulation S-K, the Company has not filed with this Annual Report on Form 10-K certain instruments defining the rights of holders of long-term debt of the Company and its subsidiaries because the total amount of securities authorized under any of such instruments does not exceed 10% of the total assets of the Company and its subsidiaries on a consolidated basis.
Item 16. Form 10-K Summary
None.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of Service Properties Trust
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Service Properties Trust (the “Company”) as of December 31, 2024 and 2023, the related consolidated statements of comprehensive income (loss), shareholders’ equity, and cash flows, for each of the three years in the period ended December 31, 2024, and the related notes and the schedule listed in the Index at Item 15(a) (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated February 26, 2025, expressed an unqualified opinion on the Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment of Real Estate Properties — Refer to Notes 2 and 13 to the financial statements
Critical Audit Matter Description
The Company’s investments in real estate properties were $6.4 billion, net of accumulated depreciation of $3.2 billion as of December 31, 2024 . The Company’s investments in real estate assets are evaluated for impairment periodically or when events or changes in circumstances indicate that the carrying amount of a real estate asset may not be recoverable. Impairment indicators may include declining tenant occupancy, weak or declining profitability from the property, decreasing tenant cash flows or liquidity, the Company’s decision to dispose of an asset before the end of its estimated useful life, and legislative, market or industry changes that could permanently reduce the value of an asset. If indicators of impairment are identified for any real estate asset, the Company evaluates the recoverability of that real estate asset by comparing undiscounted future cash flows expected to be generated by the real estate asset over the Company’s expected remaining hold period to the respective carrying amount. The Company’s undiscounted future cash flows analysis requires management to make significant estimates and assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates.
We identified the impairment of real estate assets as a critical audit matter because of the significant estimates and assumptions management makes to evaluate the recoverability of real estate assets. This required a high degree of auditor judgment and an
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increased extent of effort when performing audit procedures to evaluate the reasonableness of the significant estimates and assumptions related to expected remaining hold periods, market rents, and terminal capitalization rates within management’s undiscounted future cash flows analysis which are sensitive to future market or industry considerations.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the undiscounted cash flows analysis for each real estate asset or group of assets with impairment indicators included the following among others:
• We tested the effectiveness of controls over management’s evaluation of the recoverability of real estate property assets, including the key assumptions utilized in estimating the undiscounted future cash flows.
• We evaluated the undiscounted cash flow analysis including estimates of expected remaining hold period, market rents, and terminal capitalization rates for each real estate asset or group of assets with impairment indicators by (1) evaluating the source information and assumptions used by management and (2) comparing management’s projections to external market sources and evidence obtained in other areas of our audit.
• We evaluated the reasonableness of management’s undiscounted future cash flows analysis by developing an independent expectation of future undiscounted cash flows based on third party market data and compared that independent estimate to the carrying amount of the real estate asset or group of assets with indicators of impairment. We compared our analysis of the recoverability of the real estate asset or group of assets to the Company’s analysis.
• We made inquiries of management about the current status of potential transactions and about management's judgments to understand the probability of future events that could affect the expected remaining hold period and other cash flow assumptions for the properties.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 26, 2025
We have served as the Company’s auditor since 2020.
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Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Trustees of Service Properties Trust
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Service Properties Trust (the “Company”) as of December 31 , 2024 , based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31 , 2024 , based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31 , 2024 , of the Company and our report dated February 26, 2025, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management Report on Assessment of Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Boston, Massachusetts
February 26, 2025
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SERVICE PROPERTIES TRUST
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
December 31,
2024 2023
ASSETS
Real estate properties:
Land $ 1,930,459 $ 1,972,145
Buildings, improvements and equipment 7,682,885 7,814,192
Total real estate properties, gross 9,613,344 9,786,337
Accumulated depreciation ( 3,238,636 ) ( 3,181,797 )
Total real estate properties, net 6,374,708 6,604,540
Acquired real estate leases and other intangibles, net 107,956 130,622
Assets held for sale 43,101 10,500
Cash and cash equivalents 143,482 180,119
Restricted cash 13,904 17,711
Equity method investment 115,818 113,304
Due from related persons 3,911 6,376
Other assets, net 316,678 292,944
Total assets $ 7,119,558 $ 7,356,116
LIABILITIES AND SHAREHOLDERS’ EQUITY
Revolving credit facility $ 150,000 $ —
Senior secured notes, net 972,073 968,017
Senior unsecured notes, net 4,020,347 3,993,327
Mortgage notes payable, net 568,283 558,876
Accounts payable and other liabilities 532,864 587,005
Due to related persons 24,118 22,758
Total liabilities 6,267,685 6,129,983
Commitments and contingencies
Shareholders’ equity:
Common shares of beneficial interest, $ .01 par value; 200,000,000 shares authorized; 166,636,537 and 165,769,595 shares issued and outstanding, respectively
1,666 1,658
Additional paid in capital 4,560,334 4,557,473
Cumulative other comprehensive income 1,865 2,318
Cumulative net income 2,194,974 2,470,500
Cumulative common distributions ( 5,906,966 ) ( 5,805,816 )
Total shareholders’ equity 851,873 1,226,133
Total liabilities and shareholders’ equity $ 7,119,558 $ 7,356,116
The accompanying notes are an integral part of these consolidated financial statements.
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SERVICE PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)
(amounts in thousands, except per share data)
Year Ended December 31,
2024 2023 2022
Revenues:
Hotel operating revenues $ 1,496,705 $ 1,478,034 $ 1,467,344
Rental income 400,223 395,829 395,667
Total revenues 1,896,928 1,873,863 1,863,011
Expenses:
Hotel operating expenses 1,274,153 1,223,906 1,227,357
Net lease operating expenses
19,817 17,663 13,176
Depreciation and amortization 371,786 384,060 401,108
General and administrative 40,239 45,397 44,404
Transaction related costs 6,894 ( 1,623 ) 1,920
Loss on asset impairment, net 56,212 9,544 10,989
Total expenses 1,769,101 1,678,947 1,698,954
Gain on sale of real estate, net 6,269 43,239 47,818
Gain (loss) on equity securities, net — 48,837 ( 8,104 )
Interest income 4,052 20,979 3,379
Interest expense (including amortization of debt issuance costs, discounts and premiums of $ 31,127 , $ 25,710 and $ 19,375 , respectively)
( 383,792 ) ( 336,342 ) ( 341,795 )
Loss on early extinguishment of debt, net ( 16,181 ) ( 1,524 ) ( 791 )
Loss before income tax (expense) benefit and equity in (losses) earnings of an investee ( 261,825 ) ( 29,895 ) ( 135,436 )
Income tax (expense) benefit ( 1,402 ) 1,498 199
Equity in (losses) earnings of an investee ( 12,299 ) ( 4,382 ) 2,856
Net loss ( 275,526 ) ( 32,779 ) ( 132,381 )
Other comprehensive (loss) income:
Equity interest in investee’s unrealized (losses) gains ( 453 ) ( 65 ) 1,604
Other comprehensive (loss) income ( 453 ) ( 65 ) 1,604
Comprehensive loss $ ( 275,979 ) $ ( 32,844 ) $ ( 130,777 )
Weighted average common shares outstanding (basic and diluted) 165,338 164,988 164,738
Net loss per common share (basic and diluted) $ ( 1.67 ) $ ( 0.20 ) $ ( 0.80 )
The accompanying notes are an integral part of these consolidated financial statements.
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SERVICE PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
(dollars in thousands)
Number of Shares Common Shares Cumulative Common Distributions Additional Paid in Capital Cumulative
Net Income Cumulative Other Comprehensive Income Total
Balance at December 31, 2021 165,092,333 $ 1,651 $ ( 5,635,342 ) $ 4,552,558 $ 2,635,660 $ 779 $ 1,555,306
Net loss — — — — ( 132,381 ) — ( 132,381 )
Equity interest in investee’s unrealized gains
— — — — — 1,604 1,604
Common share grants 433,500 4 — 2,784 — — 2,788
Common share repurchases ( 69,867 ) — — ( 470 ) — — ( 470 )
Common share forfeitures ( 3,400 ) — — ( 11 ) — — ( 11 )
Distributions — — ( 38,044 ) — — — ( 38,044 )
Balance at December 31, 2022 165,452,566 1,655 ( 5,673,386 ) 4,554,861 2,503,279 2,383 1,388,792
Net loss — — — — ( 32,779 ) — ( 32,779 )
Equity interest in investee’s unrealized losses
— — — — — ( 65 ) ( 65 )
Common share grants 438,000 4 — 3,478 — — 3,482
Common share repurchases ( 98,571 ) ( 1 ) — ( 801 ) — — ( 802 )
Common share forfeitures ( 22,400 ) — — ( 65 ) — — ( 65 )
Distributions — — ( 132,430 ) — — — ( 132,430 )
Balance at December 31, 2023 165,769,595 1,658 ( 5,805,816 ) 4,557,473 2,470,500 2,318 1,226,133
Net loss — — — — ( 275,526 ) — ( 275,526 )
Equity interest in investee’s unrealized losses
— — — — — ( 453 ) ( 453 )
Common share grants 1,031,329 10 — 3,611 — — 3,621
Common share repurchases ( 161,387 ) ( 2 ) — ( 749 ) — — ( 751 )
Common share forfeitures ( 3,000 ) — — ( 1 ) — — ( 1 )
Distributions — — ( 101,150 ) — — — ( 101,150 )
Balance at December 31, 2024 166,636,537 $ 1,666 $ ( 5,906,966 ) $ 4,560,334 $ 2,194,974 $ 1,865 $ 851,873
The accompanying notes are an integral part of these consolidated financial statements.
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SERVICE PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS
(dollars in thousands)
Year Ended December 31,
2024 2023 2022
Cash flows from operating activities:
Net loss $ ( 275,526 ) $ ( 32,779 ) $ ( 132,381 )
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization 371,786 384,060 401,108
Net amortization of debt issuance costs, discounts and premiums as interest 31,127 25,710 19,375
Straight line rental income ( 18,541 ) ( 13,165 ) 7,767
Loss on early extinguishment of debt, net 16,181 1,524 791
Loss on asset impairment, net 56,212 9,544 10,989
(Gain) loss on equity securities, net — ( 48,837 ) 8,104
Equity in losses (earnings) of an investee 12,299 4,382 ( 2,856 )
Gain on sale of real estate, net ( 6,269 ) ( 43,239 ) ( 47,818 )
Deferred income taxes ( 3,169 ) ( 1,291 ) ( 1,091 )
Other non-cash income, net ( 1,841 ) ( 1,706 ) ( 2,427 )
Changes in assets and liabilities:
Due from related persons 2,465 21,135 ( 8 )
Other assets 743 35,693 3,841
Accounts payable and other liabilities ( 42,586 ) 144,079 ( 11,512 )
Due to related persons ( 3,490 ) 439 ( 10,755 )
Net cash provided by operating activities 139,391 485,549 243,127
Cash flows from investing activities:
Acquisition of real estate properties — ( 165,866 ) ( 2,766 )
Proceeds from sale of TravelCenters of America Inc. common shares — 101,892 —
Proceeds from sale of tradenames and trademarks — 89,400 —
Real estate improvements ( 303,600 ) ( 200,894 ) ( 103,646 )
Hotel managers’ purchases with restricted cash ( 6,375 ) ( 5,407 ) ( 4,952 )
Net proceeds from sale of real estate 102,382 156,432 554,087
Investment in Sonesta ( 15,266 ) ( 5,134 ) ( 45,470 )
Net cash (used in) provided by investing activities ( 222,859 ) ( 29,577 ) 397,253
Cash flows from financing activities:
Proceeds from mortgage notes payable, net of discounts — 576,946 —
Repayment of mortgage notes payable ( 1,958 ) ( 1,631 ) —
Proceeds from senior secured notes, net of discounts 1,165,007 985,900 —
Repayment of senior unsecured notes ( 1,162,653 ) ( 1,675,000 ) ( 500,000 )
Borrowings under revolving credit facility 160,000 — 20,000
Repayments of revolving credit facility ( 10,000 ) — ( 1,020,000 )
Payment of debt issuance costs ( 5,471 ) ( 56,545 ) ( 3,864 )
Repurchase of common shares ( 751 ) ( 802 ) ( 470 )
Distributions to common shareholders ( 101,150 ) ( 132,430 ) ( 38,044 )
Net cash provided by (used in) financing activities 43,024 ( 303,562 ) ( 1,542,378 )
(Decrease) increase in cash and cash equivalents and restricted cash ( 40,444 ) 152,410 ( 901,998 )
Cash and cash equivalents and restricted cash at beginning of year 197,830 45,420 947,418
Cash and cash equivalents and restricted cash at end of year $ 157,386 $ 197,830 $ 45,420
The accompanying notes are an integral part of these consolidated financial statements.
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SERVICE PROPERTIES TRUST
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(dollars in thousands)
Year Ended December 31,
2024 2023 2022
Supplemental disclosure of cash and cash equivalents and restricted cash:
The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets to the amounts shown in the consolidated statements of cash flows:
Cash and cash equivalents $ 143,482 $ 180,119 $ 38,369
Restricted cash 13,904 17,711 7,051
Total cash and cash equivalents and restricted cash $ 157,386 $ 197,830 $ 45,420
Supplemental cash flow information:
Cash paid for interest $ 366,194 $ 314,323 $ 334,264
Cash paid for income taxes $ 4,190 $ 1,365 $ 1,643
Non-cash investing activities:
Real estate improvements accrued, not paid $ 40,954 $ 47,868 $ 18,704
Non-cash financing activities:
Extinguishment of senior unsecured notes $ ( 2,569 ) $ — $ —
The accompanying notes are an integral part of these consolidated financial statements.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(dollars in thousands, except per share amounts)
Note 1. Organization
Service Properties Trust, or we, us or our, is a real estate investment trust, or REIT, organized on February 7, 1995 under the laws of the State of Maryland, which invests in hotels and service-focused retail net lease properties. At December 31, 2024, we owned, directly and through our subsidiaries, 206 hotels and 742 service-focused retail net lease properties.
At December 31, 2024, all 206 of our hotels were managed by subsidiaries of the following companies: Sonesta Holdco Corporation, or Sonesta, ( 181 hotels), Hyatt Hotels Corporation, or Hyatt ( 17 hotels), Radisson Hospitality, Inc., or Radisson ( seven hotels), and InterContinental Hotels Group, plc, or IHG ( one hotel). At December 31, 2024, our 742 service-focused retail net lease properties were leased by 177 tenants, including 175 travel centers leased to TravelCenters of America Inc., or TA, our largest tenant. Hereinafter, these companies are sometimes referred to as our managers and/or tenants, or collectively, operators.
Note 2. Summary of Significant Accounting Policies
Basis of Presentation. These consolidated financial statements include our accounts and the accounts of our subsidiaries, all of which are 100 % owned directly or indirectly by us. All intercompany transactions and balances with or among our consolidated subsidiaries have been eliminated.
We have determined that each of our wholly owned taxable REIT subsidiaries, or TRSs, is a variable interest entity, or VIE, as defined under the Consolidation Topic of the Financial Accounting Standards Board, or FASB, Accounting Standards Codification ™ , or ASC. We have concluded that we must consolidate each of our wholly owned TRSs because we are the entity with the power to direct the activities that most significantly impact such VIEs’ performance and we have the obligation to absorb losses or the right to receive benefits from each VIE that could be significant to the VIE and are, therefore, the primary beneficiary of each VIE. The assets of our TRSs were $ 144,079 and $ 142,789 as of December 31, 2024 and 2023, respectively, and consist primarily of our TRS’s investment in Sonesta’s common stock and amounts due from and working capital advances to certain of our hotel managers. The liabilities of our TRSs were $ 78,749 and $ 81,262 as of December 31, 2024 and 2023, respectively, and consist primarily of amounts payable to certain of our hotel managers. The assets of our TRSs are available to satisfy our TRSs’ obligations and we have guaranteed certain obligations of our TRSs.
Use of Estimates. The preparation of financial statements in conformity with U.S. generally accepted accounting principles, or GAAP, requires us to make estimates and assumptions that affect reported amounts. Actual results could differ from those estimates. Significant estimates in our consolidated financial statements include the allowance for credit losses, purchase price allocations, useful lives of fixed assets and impairment of real estate and related intangibles.
Real Estate Properties. We record real estate properties at cost less impairments, if any. We record the cost of real estate acquired at the relative fair value of building, land, furniture, fixtures and equipment, and, if applicable, acquired in place leases, above or below market leases and customer relationships. We determine the fair value of each property using methods similar to those used by independent appraisers, which may involve estimated cash flows that are based on a number of factors, including capitalization rates and discount rates, among others. For transactions that qualify as business combinations, we allocate the excess, if any, of the consideration over the fair value of the net assets acquired to goodwill. We depreciate real estate properties on a straight line basis over estimated useful lives of up to 40 years for buildings and improvements and up to 12 years for personal property and we amortize finite lived intangible assets over the shorter of their useful lives or the term of the associated lease. In some circumstances, we engage independent real estate appraisal firms to provide market information and evaluations which are relevant to our purchase price allocations and determination of useful lives; however, we are ultimately responsible for the purchase price allocations and determinations of useful lives.
We regularly evaluate whether events or changes in circumstances have occurred that could indicate an impairment in the value of our real estate properties. These indicators may include weak or declining operating profitability, cash flows or liquidity, our decision to dispose of an asset before the end of its estimated useful life or market or industry changes that could permanently reduce the value of our investments. If there is an indication that the carrying value of a property is not recoverable, we estimate the projected undiscounted cash flows of the asset to determine if an impairment loss should be recognized. We determine the amount of an impairment loss by comparing the historical carrying value of the property to its estimated fair value. We estimate fair value by evaluating recent financial performance and projecting discounted cash flows of properties using standard industry valuation techniques. In addition to consideration of impairment upon the events or changes in circumstances described above, we regularly evaluate the remaining lives of our real estate properties. If we change
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
estimated lives, we depreciate or amortize the carrying values of affected assets over the revised remaining lives. During the years ended December 31, 2024, 2023 and 2022, we recorded $ 56,212 , $ 9,544 and $ 10,989 , respectively, of losses on asset impairment, net to reduce the carrying value of certain of our properties to their estimated fair values or estimated fair values less costs to sell.
Intangible Assets and Liabilities. Intangible assets consist primarily of acquired above market operating leases where we are the lessor and below market ground leases for which we are the tenant or lessee. Intangible liabilities consist of acquired below market operating leases where we are the lessor and acquired above market ground leases for which we are the tenant or lessee. We include intangible assets in acquired real estate leases and other intangibles, net and intangible liabilities in accounts payable and other liabilities in our consolidated balance sheets.
At December 31, 2024 and 2023, our intangible assets and liabilities were as follows:
December 31,
2024 2023
Assets:
Above market operating leases, net of accumulated amortization of $ 97,628 and $ 95,275 , respectively
$ 105,038 $ 126,890
Below market ground leases, net of accumulated amortization of $ 11,260 and $ 13,557 , respectively
1,977 2,712
Other, net of accumulated amortization of $ 617 and $ 538 , respectively
941 1,020
$ 107,956 $ 130,622
Liabilities:
Below market operating leases, net of accumulated amortization of $ 656 and $ 784 , respectively
$ 560 $ 746
Above market ground leases, net of accumulated amortization of $ 293 in the 2023 period
— 7
$ 560 $ 753
We amortize above and below market leases on a straight line basis over the terms of the associated leases. For the years ended December 31, 2024, 2023 and 2022, amortization relating to intangible assets was $ 22,666 , $ 32,223 and $ 30,775 , respectively, and amortization relating to intangible liabilities was $ 193 , $ 205 and $ 235 , respectively. As of December 31, 2024, the weighted average amortization period for capitalized above market leases and below market leases were 9.0 years and 6.9 years, respectively. As of December 31, 2024, we estimate future amortization relating to intangible assets and liabilities as follows:
Year Above Market Operating Leases Below Market Ground Leases Other Below Market Operating Leases
2025 $ 18,857 $ 660 $ 78 $ ( 127 )
2026 14,575 658 78 ( 121 )
2027 12,467 658 78 ( 89 )
2028 9,677 1 78 ( 76 )
2029 8,098 — 78 ( 33 )
Thereafter 41,364 — 551 ( 114 )
Total $ 105,038 $ 1,977 $ 941 $ ( 560 )
Cash and Cash Equivalents. We consider highly liquid investments with original maturities of three months or less at the date of purchase to be cash equivalents.
Restricted Cash. Restricted cash consists of amounts escrowed pursuant to the terms of our hotel management agreements to fund capital improvements at our hotels and amounts escrowed as required by certain of our debt agreements.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Debt Issuance Costs. Debt issuance costs consist of capitalized issuance costs related to borrowings, which are amortized to interest expense over the terms of the respective debt. Debt issuance costs, net of accumulated amortization, for our revolving credit facility are included in other assets, net in our consolidated balance sheets. As of December 31, 2024 and 2023, debt issuance costs for our revolving credit facility were $ 13,190 and $ 12,379 , respectively, and accumulated amortization of debt issuance costs for our revolving credit facility were $ 4,958 and $ 1,502 , respectively. Debt issuance costs, net of accumulated amortization, for our senior notes and our net lease mortgage notes, are presented as a direct deduction from the associated debt liability in our consolidated balance sheets. As of December 31, 2024 and 2023, debt issuance costs, net of accumulated amortization, were $ 44,083 and $ 35,016 , respectively, for our senior notes, and $ 17,618 and $ 22,332 , respectively, for our net lease mortgage notes. Future amortization of debt issuance costs to be recognized with respect to our revolving credit facility, our senior notes and our net lease mortgage notes as of December 31, 2024, are as follows:
Year Amount
2025 $ 17,929
2026 17,523
2027 15,020
2028 7,382
2029 5,055
Thereafter 7,024
Total $ 69,933
Equity Method Investment. We account for our 34 % non-controlling interest in Sonesta under the equity method of accounting. Sonesta is a private company and Adam D. Portnoy, one of our Managing Trustees who also serves as one of Sonesta’s directors, is the controlling shareholder. One of Sonesta’s other directors is our other Managing Trustee, and Sonesta’s other director serves as The RMR Group LLC, or RMR’s, and The RMR Group Inc., or RMR Inc.’s, executive vice president, general counsel and secretary and as our Secretary. Certain of Sonesta’s officers are officers of RMR. Certain other officers and employees of Sonesta are former employees of RMR. RMR also provides certain services to Sonesta.
See Notes 4, 5 and 9 for a further discussion of our investment in and relationships with Sonesta.
Equity Securities. We record equity securities at fair value based on their quoted market price at the end of each reporting period. Changes in the fair value of our equity securities are recorded through earnings in accordance with FASB Accounting Standards Update, or ASU, No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities .
Fair Value of Financial Instruments. We determine the estimated fair value of financial assets and liabilities using the three-tier fair value hierarchy established by GAAP, which prioritizes observable inputs in active markets when measuring fair value. The three levels of inputs that may be used to measure fair value in order of priority are as follows:
Level 1 - Inputs include quoted prices in active markets for identical assets or liabilities that we have the ability to access.
Level 2 - Inputs include quoted prices in markets that are less active or inactive or for which all significant inputs are observable, either directly or indirectly.
Level 3 - Inputs include unobservable prices and are supported by little or no market activity and are significant to the overall fair value measurement.
Revenue Recognition. We report hotel operating revenues for managed hotels in our consolidated statements of comprehensive income (loss). We generally recognize hotel operating revenues, consisting primarily of room and food and beverage sales, when goods and services are provided.
We report rental income for leased properties in our consolidated statements of comprehensive income (loss). We recognize rental income from operating leases on a straight line basis over the terms of the lease agreements. We increased rental income by $ 18,541 and $ 13,165 during the years ended December 31, 2024 and 2023, respectively, and reduced rental income by $ 7,767 during the year ended December 31, 2022, to record scheduled rent changes under certain of our leases on a straight line basis. Other assets, net includes $ 81,574 and $ 56,833 of straight line rent receivables at December 31, 2024 and 2023, respectively.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Certain of our lease agreements require additional percentage rent if gross revenues of our properties exceed certain thresholds defined in our lease agreements. We may determine percentage rent due to us under our leases monthly, quarterly or annually, depending on the specific lease terms, and recognize it when all contingencies are met and the rent is earned. We recorded percentage rent of $ 2,707 , $ 6,600 and $ 10,578 during the years ended December 31, 2024, 2023 and 2022, respectively.
Per Common Share Amounts. We calculate basic earnings per common share using the two class method. We calculate diluted earnings per share using the more dilutive of the two class method or the treasury stock method. Unvested share awards and other potentially dilutive common shares, together with the related impact on earnings, are considered when calculating diluted earnings per share. For the years ended December 31, 2024, 2023 and 2022, there were no dilutive common shares and certain unvested common shares were not included in the calculation of diluted earnings per share because to do so would have been antidilutive.
Segment Information. As of December 31, 2024, we had two reportable segments: hotel investments and net lease investments.
Income Taxes. We have elected to be taxed as a REIT under the United States Internal Revenue Code of 1986, as amended, and, as such, are generally not subject to federal and most state income taxation on our operating income provided we distribute our taxable income to our shareholders and meet certain organization and operating requirements. We are subject to income tax in Canada, Puerto Rico and certain states despite our qualification for taxation as a REIT. Further, we lease our managed hotels to our wholly owned TRSs that, unlike most of our subsidiaries, file a separate consolidated tax return and are subject to federal, state and foreign income taxes. Our consolidated income tax provision (or benefit) includes the income tax provision (or benefit) related to the operations of our TRSs and certain state and foreign income taxes incurred by us despite our qualification for taxation as a REIT.
The Income Taxes Topic of the Codification prescribes how we should recognize, measure and present in our consolidated financial statements uncertain tax positions that have been taken or are expected to be taken in a tax return. Tax benefits are recognized to the extent that it is “more likely than not” that a particular tax position will be sustained upon examination or audit. To the extent the “more likely than not” standard has been satisfied, the benefit associated with a tax position is measured as the largest amount that has a greater than 50% likelihood of being realized upon settlement. Our tax returns filed for the 2021 through 2024 tax years are subject to examination by taxing authorities. We classify interest and penalties related to uncertain tax positions, if any, in our consolidated statements of comprehensive income (loss) as a component of general and administrative expense.
New Accounting Pronouncements. In November 2023, the FASB issued Accounting Standards Update, or ASU, No. 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures , or ASU No. 2023-07, which requires public entities to: (i) provide disclosures of significant segment expenses and other segment items if they are regularly provided to the Chief Operating Decision Maker, or the CODM, and included in each reported measure of segment profit or loss; (ii) provide all annual disclosures about a reportable segment’s profit or loss and assets currently required by ASC 280, Segment Reporting, in interim periods; and (iii) disclose the CODM’s title and position, as well as an explanation of how the CODM uses the reported measures and other disclosures. ASU No. 2023-07 does not change how a public entity identifies its operating segments, aggregates those operating segments, or applies the quantitative thresholds to determine its reportable segments. We adopted the new standard effective December 31, 2024. As a result, we have included additional information related to the required disclosures within Note 12 to our consolidated financial statements.
In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures , or ASU No. 2023-09, which requires public entities to enhance its annual income tax disclosures by requiring: (i) consistent categories and greater disaggregation of information in the rate reconciliation, and (ii) income taxes paid disaggregated by jurisdiction. ASU No. 2023-09 should be applied prospectively but entities have the option to apply it retrospectively to all prior periods presented in the financial statements. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024, with early adoption permitted. We are currently evaluating the impact ASU No. 2023-09 will have on our consolidated financial statements and disclosures.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses , which requires public entities to disclose specific expense categories such as employee compensation, depreciation and intangible asset amortization. These details must be presented in a tabular format in the notes to financial statements for both interim and annual reporting periods. ASU 2024-03 is required to be applied prospectively but can be applied retrospectively, and is effective for the first annual reporting period beginning after December 15, 2026, and interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact ASU 2024-03 will have on our consolidated financial statements.
Note 3. Real Estate Properties
As of December 31, 2024, we owned 206 hotels with an aggregate of 35,871 rooms or suites and 742 service-focused retail net lease properties with an aggregate of 13,292,519 square feet that are primarily subject to “triple net” leases, or net leases where the tenant is generally responsible for payment of operating expenses and capital expenditures of the property during the lease term. Our properties had an aggregate undepreciated carrying value of $ 9,704,100 , including $ 90,756 related to properties classified as held for sale as of December 31, 2024.
Our real estate properties, at cost after impairments, consisted of land of $ 1,930,459 , buildings and improvements of $ 7,342,164 and furniture, fixtures and equipment of $ 340,721 , as of December 31, 2024; and land of $ 1,972,145 , buildings and improvements of $ 7,443,750 and furniture, fixtures and equipment of $ 370,442 , as of December 31, 2023. We funded capital improvements to certain of our properties of $ 302,892 , $ 235,530 and $ 115,927 during 2024, 2023 and 2022, respectively.
At December 31, 2024, eight of our hotels and 13 of our net lease properties were on land we leased partially or entirely from unrelated third parties. The average remaining term of the ground leases (including renewal options) for these hotels and net lease properties is approximately 38 years (range of ten to 63 years) and 18 years (range of four months to 40 years), respectively. Ground rent payable under three of the hotel ground leases is generally calculated as a percentage of hotel revenues. Seven of the eight hotel ground leases require annual minimum rents averaging $ 337 per year; future rent under one ground lease has been prepaid. Ground rent payable under the ground leases for our net lease properties is generally a fixed amount, averaging $ 505 per year. Pursuant to the terms of our management agreements and leases, payments of ground lease obligations are generally made by our hotel managers and tenants. However, if a hotel manager or a tenant does not perform obligations under a ground lease or elects not to renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property. Any pledge, sale or transfer of our interests in a ground lease may require the consent of the applicable ground lessor and its lenders.
Acquisitions
Our allocation of the purchase price for each of our acquisitions in 2023 and 2022, based on the estimated fair value of the acquired assets and assumed liabilities, is presented in the table below. We accounted for these transactions as acquisitions of assets. We did not acquire any properties during the year ended December 31, 2024.
Acquisition Date Location Property Type Rooms or Suites / Square Feet
Purchase Price (1)
Land Buildings and Improvements Furniture, Fixtures and Equipment
Properties acquired during the year ended December 31, 2023:
June 1, 2023 Miami Beach, FL Hotel 250 $ 165,866 $ 83,200 $ 77,987 $ 4,679
Properties acquired during the year ended December 31, 2022:
September 12, 2022 Stoughton, MA Land — $ 2,766 $ 2,766 $ — $ —
(1) Includes acquisition related costs of $ 466 and $ 51 for the years ended December 31, 2023 and 2022, respectively.
In February 2025, we entered into an agreement to acquire one net lease property with 5,120 square feet for a purchase price of $ 5,297 , excluding closing costs.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Dispositions
During the years ended December 31, 2024, 2023 and 2022, we sold 25 , 31 and 86 properties, respectively, for an aggregate sales price of $ 105,862 , $ 170,325 and $ 559,848 , respectively, excluding closing costs. The sales of these properties as presented in the table below do not represent significant dispositions, individually or in the aggregate, nor do they represent a strategic shift in our business. As a result, the results of the operations of these properties are included in continuing operations through the date of sale in our consolidated statements of comprehensive income (loss).
Property Type Number of Properties Rooms or Suites / Square Feet Gross Sales Price (1)
(Loss) / Gain on Sale of Real Estate, net (2)
Loss on Impairment of Real Estate, net (3)
Properties sold during the year ended December 31, 2024:
Hotels 15 1,910 $ 97,315 $ 9,509 $ 29,734
Net Lease 10 96,929 8,547 ( 3,240 ) 3,936
25 1,910 / 96,929
$ 105,862 $ 6,269 $ 33,670
Properties sold during the year ended December 31, 2023:
Hotels 18 2,526 $ 157,230 $ 41,861 $ —
Net Lease 13 160,310 13,095 1,378 6,338
31 2,526 / 160,310
$ 170,325 $ 43,239 $ 6,338
Properties sold during the year ended December 31, 2022:
Hotels 65 8,296 $ 543,413 $ 48,202 $ 4,510
Net Lease 21 138,638 16,435 ( 384 ) ( 57 )
86 8,296 / 138,638
$ 559,848 $ 47,818 $ 4,453
(1) Gross sales price is the gross contract price, excluding closing costs.
(2) The 2024 period includes a gain of $ 1,100 related to an eminent domain land taking at one of our hotels.
(3) We also recorded impairment of $ 22,542 , $ 3,206 and $ 6,536 during the years ended December 31, 2024, 2023 and 2022, respectively, related to certain properties we owned during the periods presented.
As of December 31, 2024, we had eight hotels with an aggregate of 1,006 rooms and an aggregate carrying value of $ 38,537 , and nine net lease properties with an aggregate of 183,292 square feet and an aggregate carrying value of $ 3,278 classified as held for sale. See Note 13 for further information on these properties.
From January 1, 2025 through February 24, 2025, we sold one hotel with 149 keys for a sales price of $ 4,000 , excluding closing costs, and two net lease properties with an aggregate of 49,081 square feet for an aggregate sales price of $ 1,300 , excluding closing costs. We have also entered into agreements to sell five hotels with an aggregate of 623 keys for an aggregate sales price of $ 28,500 , excluding closing costs, and two net lease properties with an aggregate of 155,559 square feet for an aggregate sales price of $ 5,800 , excluding closing costs. These pending sales are subject to conditions; accordingly, we cannot be sure that we will complete these sales, that these sales will not be delayed or that the terms will not change. We continue to market two hotels with an aggregate of 234 keys and six net lease properties with an aggregate of 80,249 square feet for sale. We believe it is probable that the sales of these properties will be completed within one year.
Note 4. Management Agreements and Leases
As of December 31, 2024, we owned 206 hotels included in four operating agreements and 742 service-focused retail properties net leased to 177 tenants. We do not operate any of our properties.
As of December 31, 2024, all 206 of our hotels were managed by subsidiaries of the following companies: Sonesta ( 181 hotels), Hyatt ( 17 hotels), Radisson ( seven hotels) and IHG ( one hotel). As of December 31, 2024, our 742 service-focused retail net lease properties were leased by 177 tenants, including 175 travel centers leased to TA, our largest tenant.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Hotel Agreements
Sonesta Agreement. As of December 31, 2024, Sonesta managed 39 of our full service hotels, 100 of our extended stay hotels and 42 of our select service hotels pursuant to management agreements for all of the hotels, which we collectively refer to as our Sonesta agreement. The hotels Sonesta managed for us comprised approximately 50.0 % of our total historical real estate investments.
We acquired one hotel in June 2023, and we and Sonesta added this hotel to our Sonesta agreement. We sold 14 and two Sonesta branded hotels during the years ended December 31, 2024 and 2023, respectively. See Note 3 for further information regarding our acquisition and disposition activities.
Our Sonesta agreement, which expires on January 31, 2037 and includes two 15 -year renewal options, provides that we are paid an annual owner’s priority return if gross revenues of the hotels, after payment of hotel operating expenses and management and related fees (other than Sonesta’s incentive fee, if applicable), are sufficient to do so. The Sonesta agreement further provides that we are paid an additional return equal to 80 % of the operating profits, as defined therein, after paying the owner’s priority return, reimbursing owner or manager advances, funding FF&E reserves and paying Sonesta’s incentive fee, if applicable. We do not have any security deposits or guarantees for our Sonesta hotels. We realized returns under our Sonesta agreement of $ 189,386 , $ 226,181 and $ 196,721 during the years ended December 31, 2024, 2023 and 2022, respectively.
Our Sonesta agreement requires us to fund capital expenditures made at our hotels. We made capital expenditures for hotels included in our Sonesta agreement in an aggregate amount of $ 258,337 and $ 172,028 during the years ended December 31, 2024 and 2023, respectively, which resulted in increases in our contractual annual owner’s priority returns of $ 15,488 and $ 10,321 , respectively. Our annual priority return under our Sonesta agreement as of December 31, 2024 was $ 356,172 . We owed Sonesta $ 18,199 and $ 13,300 for capital expenditures and other reimbursements as of December 31, 2024 and 2023, respectively. Sonesta owed us $ 3,911 and $ 6,376 in owner’s priority returns and other amounts as of December 31, 2024 and 2023, respectively. Amounts due from Sonesta are included in due from related persons and amounts owed to Sonesta are included in due to related persons in our consolidated balance sheets. Our Sonesta agreement requires that 5 % of the hotel gross revenues be escrowed for future capital expenditures as FF&E reserves, subject to available cash flows after payment of the owner’s priority returns due to us. No FF&E escrow deposits were required during any of the years ended December 31, 2024, 2023 or 2022.
Pursuant to our Sonesta agreement, we incurred management, reservation and system fees and reimbursement costs for certain guest loyalty, marketing programs and third-party reservation transmission fees of $ 119,628 , $ 118,146 and $ 114,563 for the years ended December 31, 2024, 2023 and 2022, respectively. These fees and costs are included in hotel operating expenses in our consolidated statements of comprehensive income (loss). In addition, we incurred procurement and construction supervision fees payable to Sonesta of $ 2,877 and $ 1,791 for the years ended December 31, 2024 and 2023, respectively, which amounts have been capitalized in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.
We are required to maintain working capital for each of our hotels managed by Sonesta and have advanced a fixed amount based on the number of rooms in each hotel to meet the cash needs for hotel operations. As of December 31, 2024 and 2023, we had advanced $ 46,466 and $ 48,490 , respectively, of initial working capital to Sonesta net of any working capital returned to us on termination of the applicable management agreements in connection with hotels we have sold. These amounts are included in other assets, net in our consolidated balance sheets. Any remaining working capital would be returned to us upon termination in accordance with the terms of our Sonesta agreement.
In general, we and Sonesta may terminate the management agreement for events of default, casualty and condemnation events, although Sonesta may not terminate for certain events of default. We also have the right to terminate the management agreement if minimum performance thresholds are not met for any three of four applicable consecutive years beginning with the 2023 calendar year. Pursuant to our Sonesta agreement, we or Sonesta may be obligated to pay the other party damages if the terminating party terminates a management agreement due to the other party’s event of default.
See Notes 5 and 9 for further information regarding our relationships, agreements and transactions with Sonesta.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Hyatt Agreement. As of December 31, 2024, Hyatt managed 17 of our select service hotels pursuant to a portfolio management agreement that expires on March 31, 2031, or our Hyatt agreement, and provides that, as of December 31, 2024, we are to be paid an annual owner’s priority return of $ 17,455 . Any returns we receive from Hyatt are currently limited to the hotels’ available cash flows, if any, after payment of operating expenses. Hyatt has provided us with a $ 30,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that will become effective upon substantial completion of planned renovations of the hotels, which occurred in January 2025. We realized returns under our Hyatt agreement of $ 5,860 , $ 9,371 and $ 12,281 during the years ended December 31, 2024, 2023 and 2022, respectively. In February 2024, we funded $ 2,300 of additional working capital to Hyatt. We may recover this amount in the future, if cash flows are sufficient to pay our owner’s priority return and other amounts in accordance with our Hyatt agreement. During the years ended December 31, 2024 and 2023, we incurred capital expenditures for certain hotels included in our Hyatt agreement of $ 31,665 and $ 46,679 , respectively, which resulted in an aggregate increase in our contractual annual owner’s priority returns of $ 1,900 and $ 2,801 , respectively.
Radisson Agreement . As of December 31, 2024, Radisson managed seven of our full service hotels pursuant to a portfolio management agreement that expires on July 31, 2031, or our Radisson agreement, and provides that we are to be paid an annual owner’s priority return of $ 10,913 . Radisson has provided us with a $ 22,000 limited guarantee for 75 % of the aggregate annual owner’s priority returns due to us that became effective on January 1, 2023, subject to adjustment for planned renovations of certain hotels, which were completed in December 2024. We realized returns under our Radisson agreement of $ 6,518 , $ 6,266 and $ 6,387 for the years ended December 31, 2024, 2023 and 2022, respectively. During the year ended December 31, 2024, the hotels under this agreement generated cash flows that exceeded the guaranteed owner’s priority level due to us for the period. During the year ended December 31, 2023, the hotels under this agreement generated cash flows that were less than the guaranteed owner’s priority level due to us for the period, and Radisson made $ 650 of guaranty payments to cover the shortfall. The available balance of the guaranty was $ 21,350 as of December 31, 2024. During the years ended December 31, 2024 and 2023, we incurred capital expenditures of $ 778 and $ 7,660 , respectively, for the hotels included in our Radisson agreement, which resulted in an aggregate increase in our contractual owner’s priority returns of $ 47 and $ 460 , respectively.
Marriott Agreement . As of December 31, 2023, we sold all 16 hotels previously managed by Marriott International, Inc., or Marriott. We realized a net operating loss under our management agreement with Marriott of $ 2,762 during the year ended December 31, 2023 and a return of $ 8,942 during the year ended December 31, 2022. We did not incur capital expenditures for any of the hotels included in our management agreement with Marriott during either of the years ended December 31, 2023 or 2022.
IHG Agreement. Our management agreement with IHG for one hotel expires on January 31, 2026. We realized returns under our management agreement with IHG of $ 5,051 , $ 4,800 and $ 3,561 for the years ended December 31, 2024, 2023 and 2022, respectively. Any returns we receive from IHG are limited to the hotel’s available cash flows, if any, after payment of operating expenses. During the year ended December 31, 2023, we recovered $ 5,797 of working capital that we previously funded under our IHG agreement and expensed in 2021 to transaction related costs when the amount was not expected to be recovered. The amount recovered is included in transaction related costs in our consolidated statements of comprehensive income (loss). During the years ended December 31, 2024 and 2023, we incurred capital expenditures for our hotel in our IHG agreement of $ 1,124 and $ 542 , respectively.
Net Lease Portfolio
As of December 31, 2024, we owned 742 service-focused retail net lease properties with an aggregate of 13,292,519 square feet with leases requiring annual minimum rents of $ 380,863 with a weighted (by annual minimum rents) average remaining lease term of 8.0 years. Our net lease properties were 97.6 % occupied and leased by 177 tenants operating under 136 brands in 21 distinct industries.
TA Leases. As of December 31, 2024, TA is our largest tenant, representing 28.7 % of our total historical real estate investments. We lease to TA a total of 175 travel centers under five master leases that expire in 2033, or our TA leases, subject to TA’s right to extend those leases, and require annual minimum rents of $ 259,080 as of December 31, 2024. TA receives a monthly rent credit totaling $ 25,000 per year over the ten-year initial term of the TA leases as a result of rent it prepaid. On February 28, 2024, TA acquired the leasehold interest of one of our travel centers from a third party landlord. The aggregate minimum rent due to us under our leases with TA for the remaining 175 travel centers was unchanged as a result of TA’s acquisition of this leasehold interest.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
As of December 31, 2024, the number of travel centers, the terms and the annual minimum rents owed to us by TA under our TA leases was as follows:
Number of Travel Centers Initial Term End (1)
Annual Minimum Rent (2)
TA No. 1 Lease 34 May 14, 2033 $ 53,004
TA No. 2 Lease 36 May 14, 2033 47,033
TA No. 3 Lease 34 May 14, 2033 45,290
TA No. 4 Lease 36 May 14, 2033 47,964
TA No. 5 Lease 35 May 14, 2033 65,789
175 $ 259,080
(1) TA has five renewal options of ten years each under each of our TA leases.
(2) Annual minimum rent increases by 2 % each year through the initial term of ten years and any of the five ten-year extension options that may be exercised. There is no percentage rent due under our TA leases.
Our TA leases are “triple net” leases that require TA to pay all costs incurred in the operation of the leased travel centers, including personnel, utility, inventory, customer service and insurance expenses, real estate and personal property taxes, environmental related expenses, underground storage tank maintenance costs and ground lease payments at those travel centers at which we lease the property and sublease it to TA. Our TA leases generally require TA to indemnify us for certain environmental matters and for liabilities that arise during the terms of the leases from ownership or operation of the leased travel centers. Our TA leases do not require FF&E escrow deposits. However, TA is required to maintain the leased travel centers, including structural and non-structural components. BP Corporation North America Inc., a subsidiary of BP p.l.c., guarantees payment under each of the TA leases, limited to an aggregate cap which was $ 3,037,475 as of December 31, 2024.
We recognized rental income from our TA leases of $ 271,334 , $ 266,263 and $ 259,093 for the years ended December 31, 2024, 2023 and 2022, respectively. Rental income increased by $ 14,272 and $ 7,932 for the years ended December 31, 2024 and 2023, respectively, and decreased by $ 13,143 for the year ended December 31, 2022, to record the scheduled rent changes on a straight line basis. TA was required to pay us previously deferred rent obligations in quarterly installments of $ 4,404 through January 31, 2023. TA paid us the final quarterly installment owed to us in January 2023. As of December 31, 2024 and 2023, we had receivables for current rent amounts owed to us by TA and straight line rent adjustments of $ 40,097 and $ 19,816 , respectively, included in other assets, net in our consolidated balance sheets.
Until May 15, 2023, our TA leases required TA to pay us percentage rent based upon increases in certain sales. We recognized percentage rent due under our TA leases as rental income when all contingencies were met. We recognized percentage rent of $ 3,507 and $ 10,578 during the years ended December 31, 2023 and 2022, respectively, under our TA leases.
For further information regarding our relationships with TA, including the TA Merger, as defined below, see Notes 5 and 9.
Our other net lease agreements generally provide for minimum rent payments and in addition may include variable payments. Rental income from operating leases, including any payments derived by index or market-based indices, is recognized on a straight-line basis over the lease term when we have determined that the collectability of substantially all of the lease payments is probable. Some of our leases have options to extend or terminate the lease exercisable at the option of our tenants, which are considered when determining the lease term. We recognized rental income from our net lease properties (excluding TA) of $ 128,889 , $ 129,566 and $ 135,522 for the years ended December 31, 2024, 2023 and 2022, respectively, which included $ 4,269 , $ 5,233 and $ 5,367 , respectively, of adjustments to record scheduled rent changes under certain of our leases on a straight line basis.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
We continually review receivables related to rent, straight-line rent and property operating expense reimbursements and determine collectability by taking into consideration the tenant’s payment history, the financial condition of the tenant, business conditions in the industry in which the tenant operates and economic conditions in the area in which the property is located. The review includes an assessment of whether substantially all of the amounts due under a tenant’s lease are probable of collection. For leases that are deemed probable of collection, revenue continues to be recorded on a straight-line basis over the lease term. For leases that are deemed not probable of collection, revenue is recorded as cash is received. We recognize all changes in the collectability assessment for an operating lease as an adjustment to rental income. We recorded reserves for uncollectable amounts and reduced rental income by $ 2,158 and $ 4,927 during the years ended December 31, 2024 and 2023, respectively, and reduced our reserves for uncollectable amounts and increased rental income by $ 320 during the year ended December 31, 2022, based on our assessment of the collectability of rents. We had reserves for uncollectable rents of $ 5,058 and $ 3,436 as of December 31, 2024 and 2023, respectively, included in other assets, net in our consolidated balance sheets.
Additional lease information (as lessor). As of December 31, 2024, our leases with parties other than our TRSs, provide for contractual minimum rents to be paid to us during the remaining current terms as follows:
Year Amount
2025 $ 380,743
2026 375,642
2027 371,752
2028 366,378
2029 362,395
Thereafter 1,454,236
Total $ 3,311,146
Additional lease information (as lessee). As of December 31, 2024, eight of our hotels were subject to ground leases where we are the lessee. In addition, our hotel operators enter various leases on our behalf in the normal course of business at our hotels, or our hotel operating leases. We calculated right of use assets and lease liabilities as the present value of the remaining lease payment obligations for our operating leases, which include the ground leases and hotel operating leases, over the remaining lease term using our estimated incremental borrowing rate. The right of use assets and related lease liabilities are included within other assets, net and accounts payable and other liabilities, respectively, in our consolidated balance sheets.
At December 31, 2024 and 2023, our right of use assets and related lease liabilities each totaled $ 150,846 and $ 157,127 , respectively, which represented our future obligations under our operating leases and are included in other assets, net and accounts payable and other liabilities , respectively, in our consolidated balance sheets. Our operating leases require minimum fixed rent payments, percentage rent payments based on a percentage of hotel revenues in excess of certain thresholds and rent payments equal to the greater of a minimum fixed rent or percentage rent. Rental expense related to our hotel operating leases of $ 9,476 , $ 9,618 and $ 11,148 for the years ended December 31, 2024, 2023 and 2022, respectively, is included in hotel operating expenses within our consolidated statements of comprehensive income (loss). For operating leases related to our net lease properties, our tenants are required to pay the rental expense. As of December 31, 2024, our operating leases provide for contractual minimum rent payments to third parties during the remaining lease terms, as follows:
Year Amount
2025 $ 14,120
2026 14,240
2027 14,184
2028 13,891
2029 14,378
Thereafter 201,838
Total lease payments 272,651
Less: imputed interest ( 121,805 )
Present value of lease liabilities (1)
$ 150,846
(1) The weighted average discount rate used to calculate the lease liability and the weighted average remaining term for our ground leases (assuming all extension options) and our hotel operating leases are approximately 5.4 % and 19 years (range of three months to 63 years) and 5.7 % and 34 years (range of three months to 49 years), respectively.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Generally, payments of ground lease obligations are made by our managers or tenants. However, if a manager or tenant did not perform obligations under a ground lease or did not renew any ground lease, we might have to perform obligations under the ground lease or renew the ground lease in order to protect our investment in the affected property.
Note 5. Other Investments
Equity Method Investment
As of both December 31, 2024 and 2023, we owned 34 % of Sonesta’s outstanding common stock. We account for our 34 % non-controlling interest in Sonesta under the equity method of accounting.
As of December 31, 2024 and 2023, our investment in Sonesta had a carrying value of $ 115,818 and $ 113,304 , respectively. O n the date of acquisition of our initial equity interest in Sonesta ( February 27, 2020), t he cost basis of our investment in Sonesta exceeded our proportionate share of Sonesta’s total stockholders’ equity book value by an aggregate of $ 8,000 . As required under GAAP, we are amortizing this difference to equity in earnings of an investee over 31 years, the weighted average remaining useful life of the real estate assets and intangible assets and liabilities owned by Sonesta as of the date of our acquisition. We recorded amortization of the basis difference of $ 260 in each of the years ended December 31, 2024, 2023 and 2022. We recognized (losses) earnings of $( 12,299 ), $( 4,382 ) and $ 2,856 related to our investment in Sonesta for the years ended December 31, 2024, 2023 and 2022, respectively. These amounts, which include amortization of the basis difference, are included in equity in (losses) earnings of an investee in our consolidated statements of comprehensive income (loss).
We recorded a liability of $ 42,000 for the fair value of our initial investment in Sonesta, as no cash consideration was exchanged related to the modification of our management agreement with, and investment in, Sonesta. This liability for our investment in Sonesta is included in accounts payable and other liabilities in our consolidated balance sheets and is being amortized on a straight-line basis through the initial term of the Sonesta agreement, January 31, 2037 , as a reduction to hotel operating expenses in our consolidated statements of comprehensive income (loss). We reduced hotel operating expenses by $ 2,484 for each of the years ended December 31, 2024, 2023 and 2022, for amortization of this liability. As of December 31, 2024 and 2023, the unamortized balance of this liability was $ 29,995 and $ 32,479 , respectively.
In 2024 and 2023, we funded capital contributions to Sonesta of $ 15,266 and $ 5,134 , respectively, to support its growth initiatives, including its franchising efforts. In 2022, we funded an aggregate of $ 45,470 of capital contributions to Sonesta related to Sonesta’s acquisition of a portfolio of four hotels located in New York, New York. We continue to maintain our 34 % ownership in Sonesta after giving effect to these contributions.
Summarized financial information for Sonesta as of December 31, 2024 and 2023, and for the years ended December 31, 2024, 2023 and 2022 is as follows:
December 31,
2024
2023
Total current assets $ 200,461 $ 171,265
Total noncurrent assets $ 725,599 $ 694,828
Total current liabilities $ 178,933 $ 155,935
Total noncurrent liabilities $ 373,597 $ 342,839
Non-controlling interest $ 52,964 $ 54,963
Year Ended December 31,
2024
2023 2022
Total revenues $ 815,457 $ 765,011 $ 681,434
Operating (loss) income $ ( 12,216 ) $ 5,013 $ 21,929
Net (loss) income $ ( 36,158 ) $ ( 10,823 ) $ 10,056
Net (loss) income attributable to shareholders $ ( 35,452 ) $ ( 11,404 ) $ 9,184
See Notes 4 and 9 for further information regarding our relationships, agreements and transactions with Sonesta.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Investment in Equity Securities
Until May 15, 2023, we owned 1,184,797 shares, or approximately 7.8 %, of TA common stock, which were reported at fair value based on quoted market prices (Level 1 inputs as defined in the fair value hierarchy under GAAP) as of the end of the period, with changes in fair value recorded in earnings in our consolidated statements of comprehensive income (loss). As of May 15, 2023, our historical cost basis for these shares was $ 24,418 and our carrying value for these shares was $ 101,893 . On May 15, 2023, BP Products North America Inc. acquired TA pursuant to a merger, or the TA Merger, for $ 86.00 per share of TA common stock in cash. We recorded a gain of $ 48,837 and a loss of $ 8,104 during the years ended December 31, 2023 and 2022, respectively, to adjust the carrying value of our former investment in shares of TA common stock to its fair value.
See Notes 4 and 9 for further information regarding our relationships, agreements and transactions with TA.
Note 6. Indebtedness
Our principal debt obligations at December 31, 2024 were: (1) $ 150,000 of outstanding borrowings under our $ 650,000 revolving credit facility; (2) $ 4,075,000 aggregate outstanding principal amount of senior unsecured notes; (3) $ 1,000,000 aggregate outstanding principal amount of senior secured notes; and (4) $ 606,611 aggregate outstanding principal amount of net lease mortgage notes.
Revolving Credit Facility
Our $ 650,000 secured revolving credit facility is available for general business purposes, including acquisitions. We can borrow, repay and reborrow funds available under our revolving credit facility until maturity and no principal repayments are due until maturity. Availability of borrowings under our credit agreement is subject to ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions. The maturity date of our revolving credit facility is June 29, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, we have an option to further extend the stated maturity date of the facility by two additional six-month periods.
Interest payable on drawings under our revolving credit facility is based on the secured overnight financing rate, or SOFR, plus a margin ranging from 1.50 % to 3.00 % based on our leverage ratio, as defined in our credit agreement, which was 2.50 % as of December 31, 2024. As collateral for all loans and other obligations under the facility, certain of our subsidiaries pledged all of their respective equity interests in certain of our direct and indirect property owning subsidiaries, and our pledged subsidiaries provided first mortgage liens on 69 properties, including 66 hotels and three net lease properties, with an aggregate undepreciated carrying value of $ 1,717,254 as of December 31, 2024. During the year ended December 31, 2024, we sold three hotels that served as collateral under our revolving credit facility. In connection with the sales of these hotels, the hotels were released from the collateral pool in accordance with the terms of our revolving credit facility. We also pay unused commitment fees of 20 to 30 basis points per annum on the total amount of lending commitments under our revolving credit facility based on amounts outstanding. As of December 31, 2024 and 2023, the annual interest rate payable on borrowings under our revolving credit facility was 6.99 % and 7.88 %, respectively. The weighted average interest rate for borrowings under our revolving credit facility was 7.43 % for the year ended December 31, 2024. We had no borrowings outstanding under our revolving credit facility during the year ended December 31, 2023. As of December 31, 2024 and February 24, 2025, we had $ 150,000 and $ 50,000 , respectively, outstanding under our revolving credit facility and $ 500,000 and $ 600,000 , respectively, available for borrowing.
Availability under our revolving credit facility is partially based on the performance of the properties serving as collateral under the facility. Based on expectations of performance of certain of the collateral properties, we and our lenders amended the credit facility in October 2024 to temporarily reduce the required collateral property debt yield from 12 % to 8.5 % from September 30, 2024 through December 31, 2024, and increase the required collateral property debt yield to 9.5 % for the quarter ending March 31, 2025; 10 % for the quarter ending June 30, 2025; 11 % for the quarter ending September 30, 2025; and 12 % for the quarter ending December 31, 2025 and thereafter. Subject to meeting these revised collateral property debt yield levels and meeting other conditions, we will continue to have full access to undrawn amounts under our revolving credit facility.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
In February 2025, we and our lenders further amended our revolving credit facility to reduce the required debt service coverage ratio covenant from 1.50 times to 1.30 times effective with respect to the fourth quarter of 2024 and continuing through the end of the loan term. In order to exercise the first extension option, we would be required to maintain 1.50 times debt service coverage level as of and for the duration of the extension period. We also agreed to change the required collateral property debt yield to 10 % effective with respect to the first quarter of 2025 and continuing through the end of the loan term and to swap collateral properties as follows: 49 hotels with an aggregate of 8,197 keys and an aggregate undepreciated carrying value of $ 1,402,307 will be released from the collateral pool and 35 travel centers leased to TA, which travel centers we refer to as our TA No. 5 lease, with an aggregate undepreciated carrying value of $ 601,684 , will be added as collateral to our revolving credit facility. Of the hotels being released from the collateral pool, 38 hotels with an aggregate of 5,078 keys and an aggregate undepreciated carrying value of $ 689,592 are part of our hotel disposition plan. The corresponding equity pledges will be swapped as well. We expect to complete this collateral swap by the end of the second quarter of 2025.
Our debt agreements provide for acceleration of payment of all amounts outstanding upon the occurrence and continuation of certain events of default, such as, in the case of our credit agreement, a change of control of us, which includes RMR ceasing to act as our business manager. Our debt agreements also contain covenants, including those that restrict our ability to incur debts or to make distributions under certain circumstances and generally require us to maintain certain financial ratios. Borrowings under our revolving credit facility are subject to meeting ongoing minimum performance and market values of the collateral properties, satisfying certain financial covenants and other credit facility conditions. We believe we were in compliance with the terms and conditions of our debt agreements as of December 31, 2024.
Senior Guaranteed Unsecured Notes Issuance
In June 2024, we issued $ 700,000 aggregate principal amount of 8.375 % senior guaranteed unsecured notes due 2029 and $ 500,000 aggregate principal amount of 8.875 % senior guaranteed unsecured notes due 2032 in underwritten public offerings. The aggregate net proceeds from these notes were $ 1,162,077 , after underwriting discounts and other offering expenses. These notes are fully and unconditionally guaranteed, on a joint and several basis and on a senior unsecured basis, by all of our subsidiaries, except for our foreign subsidiaries and certain other excluded subsidiaries. Such other excluded subsidiaries include, but are not limited to, subsidiaries whose equity has been pledged to secure borrowings under our credit agreement and our 8.625 % senior secured notes due 2031, and subsidiaries whose assets secure our net lease mortgage notes.
Repayment of 2025 Maturities
In June 2024, we redeemed all of our outstanding 7.50 % senior unsecured notes due 2025 for a redemption price equal to the principal amount of $ 800,000 , plus accrued and unpaid interest and a premium equal to a make whole amount. As a result of the redemption, we recorded a loss on early extinguishment of debt of $ 17,681 during the year ended December 31, 2024, which represented the make whole premium and the write-off of unamortized discounts and issuance costs related to these notes.
In June 2024, we repurchased $ 272,803 principal amount of our $ 350,000 4.50 % senior unsecured notes due 2025 at a total cost of $ 270,396 , excluding accrued interest, pursuant to a cash tender offer. Also in June 2024, we effected the satisfaction and discharge of the remaining $ 77,197 principal amount of our $ 350,000 4.50 % senior unsecured notes due 2025 that were not purchased as part of the tender offer in accordance with their terms. As a result of these transactions, we recorded a gain on early extinguishment of debt of $ 1,500 during the year ended December 31, 2024, which represented the discount to par paid to repurchase the notes, net of the write-off of unamortized discounts and issuance costs related to these notes .
Net Lease Mortgage Notes
Our $ 610,200 in aggregate principal amount of net lease mortgage notes were issued on February 10, 2023 by our wholly owned, special purpose bankruptcy remote, indirect subsidiary, SVC ABS LLC, or the Issuer. The Issuer is a separate legal entity and is the sole owner of its assets and liabilities. The assets of the Issuer are not available to pay or otherwise satisfy obligations to the creditors of any owners or affiliates of the Issuer.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Our net lease mortgage notes are summarized below:
Note Class Principal Outstanding
as of December 31, 2024
Coupon Rate Initial Term
(in years) Maturity
Class A $ 302,204 5.15 % 5 February 2028
Class B 172,207 5.55 % 5 February 2028
Class C 132,200 6.70 % 5 February 2028
Total / weighted average $ 606,611 5.60 %
The Class A notes and the Class B notes require monthly principal repayments at an annualized rate of 0.50 % and 0.25 % of the balance outstanding, respectively, and the Class C notes require interest payments only, with balloon payments due at maturity. The notes mature in February 2028 and may be redeemed without penalty 24 months prior to the scheduled maturity date beginning in February 2026. The notes are non-recourse and are secured by 315 net lease retail properties owned by the Issuer. As of December 31, 2024, the current leases relating to those properties required annual minimum rents of $ 66,632 and had an aggregate undepreciated carrying value of $ 760,033 .
On January 27, 2025, the Issuer issued a variable funding note, or VFN, secured by the 315 net lease properties that also secure our existing $ 606,611 of net lease mortgage notes. The VFN permits borrowings on a revolving basis up to $ 45,000 and the Issuer can borrow, repay and reborrow funds available until maturity. The maturity date of the VFN is January 27, 2027, and, subject to the payment of an extension fee and meeting certain other conditions, can be extended by one year at the Issuer’s option. The VFN requires interest payments only on drawings under the VFN based on SOFR plus a margin of 1.75 %, and an unused commitment fee of 50 basis points per annum paid on undrawn amounts. We borrowed $ 45,000 for general business purposes under the VFN upon closing.
The required principal payments due during the next five years and thereafter under all our outstanding debt at December 31, 2024 were as follows:
Year Amount
2025 $ 1,958
2026 801,958
2027 1,001,958
2028 1,000,737
2029 1,125,000
Thereafter 1,900,000
Total $ 5,831,611
Note 7. Shareholders’ Equity
Share Awards
We have common shares available for issuance under the terms of our Amended and Restated 2012 Equity Compensation Plan, or the 2012 Plan. During the years ended December 31, 2024, 2023 and 2022, we awarded shares to our Trustees, officers and other employees of RMR as follows:
Year Number of Shares Weighted Average Grant Date Fair Value Weighted Average Value of Grants
2024 1,031,329 $ 4.50 $ 4,641
2023 438,000 $ 7.88 $ 3,451
2022 433,500 $ 6.63 $ 2,874
The value of the share awards were based upon the closing price of our common shares on The Nasdaq Stock Market LLC, or Nasdaq, on the date of the awards. The common shares awarded to our Trustees vest immediately. The common shares awarded to our officers and certain other employees of RMR (in those capacities) vest in five equal annual installments beginning on the date of the award. Shares forfeited are recognized as they occur. Share awards are expensed ratably over the vesting period and the value of such share awards are included in general and administrative expense in our consolidated statements of comprehensive income (loss).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
A summary of shares awarded, vested, forfeited and unvested under the terms of the 2012 Plan for the years ended December 31, 2024, 2023 and 2022 is as follows:
2024 2023 2022
Number
of
Shares Weighted
Average
Grant Date
Fair Value Number
of
Shares Weighted
Average
Grant Date
Fair Value Number
of
Shares Weighted
Average
Grant Date
Fair Value
Unvested shares, beginning of year 609,960 $ 7.88 588,830 $ 8.81 425,030 $ 11.93
Shares awarded 1,031,329 $ 4.50 438,000 $ 7.88 433,500 $ 6.63
Shares vested ( 613,848 ) $ 6.23 ( 394,470 ) $ 9.21 ( 266,300 ) $ 10.20
Shares forfeited ( 3,000 ) $ 6.75 ( 22,400 ) $ 8.91 ( 3,400 ) $ 12.08
Unvested shares, end of year 1,024,441 $ 5.47 609,960 $ 7.88 588,830 $ 8.81
The 1,024,441 unvested shares as of December 31, 2024 are scheduled to vest as follows: 320,980 shares in 2025, 289,362 shares in 2026, 239,080 shares in 2027 and 175,019 shares in 2028. As of December 31, 2024, the estimated future compensation expense for the unvested shares was $ 5,021 . The weighted average period over which the compensation expense will be recorded is approximately 24 months. During the years ended December 31, 2024, 2023 and 2022, we recorded $ 3,620 , $ 3,417 and $ 2,775 , respectively, of compensation expense related to the 2012 Plan.
At December 31, 2024, 217,189 of our common shares remain reserved for issuance under the 2012 Plan.
Share Purchases
During the years ended December 31, 2024, 2023 and 2022, we purchased our common shares from our officers and certain other current and former officers and employees of RMR in satisfaction of tax withholding and payment obligations in connection with the vesting of our common shares as follows:
Year Aggregate Number
of Shares Purchased Weighted Average
Purchase Price Value
2024 161,387 $ 4.65 $ 751
2023 98,571 $ 8.14 $ 802
2022 69,867 $ 6.72 $ 470
Distributions
During the years ended December 31, 2024, 2023 and 2022, we paid distributions on our common shares as follows:
Annual Per Share Distribution Total Distributions Characterization of Distributions
Year Ordinary Income Capital Gain Return of Capital Qualified Dividend (1)
2024 $ 0.61 $ 101,150 — % — % 100.00 % — %
2023 $ 0.80 $ 132,430 9.30 % 86.15 % 4.55 % 6.25 %
2022 $ 0.23 $ 38,044 — % — % 100.00 % — %
(1) Qualified Dividends are a subset of, and included in, the Ordinary Income amount.
On January 16, 2025, we declared a regular quarterly distribution to common shareholders of record on January 27, 2025 of $ 0.01 per share, or $ 1,666 . We paid this distribution on February 20, 2025.
Cumulative Other Comprehensive Income (Loss)
Cumulative other comprehensive income (loss) represents our share of the comprehensive income (loss) of Sonesta. See Notes 4, 5 and 9 for further information regarding this investment.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Note 8. Business and Property Management Agreements with RMR
We have no employees. The personnel and various services we require to operate our business are provided to us by RMR. We have two agreements with RMR to provide management services to us: (1) a business management agreement, which relates to our business generally, and (2) a property management agreement, which relates to our property level operations of our net lease portfolio, the office building component of one of our hotels and major renovation or repositioning activities at our hotels that we may request RMR to manage from time to time. See Note 9 for further information regarding our relationships, agreements and transactions with RMR.
Management Agreements with RMR. Our management agreements with RMR provide for an annual base management fee, an annual incentive management fee and property management and construction supervision fees, payable in cash, among other terms:
• Base Management Fee. The annual base management fee payable to RMR by us for each applicable period is equal to the lesser of:
◦ the sum of (a) 0.7 % of the average aggregate historical cost of our real estate investments up to $ 250,000 , plus (b) 0.5 % of the average aggregate historical cost of our real estate investments exceeding $ 250,000 ; and
◦ the sum of (a) 0.7 % of the average closing price per share of our common shares on the stock exchange on which such shares are principally traded, during such period, multiplied by the average number of our common shares outstanding during such period, plus the daily weighted average of the aggregate liquidation preference of each class of our preferred shares outstanding during such period, plus the daily weighted average of the aggregate principal amount of our consolidated indebtedness during such period, or, together, our Average Market Capitalization, up to $ 250,000 , plus (b) 0.5 % of our Average Market Capitalization exceeding $ 250,000 .
The average aggregate historical cost of our real estate investments includes our consolidated assets invested, directly or indirectly, in equity interests in or loans secured by real estate and personal property owned in connection with such real estate (including acquisition related costs and costs which may be allocated to intangibles or are unallocated), all before reserves for depreciation, amortization, impairment charges or bad debts or other similar non-cash reserves.
• Incentive Management Fee . The incentive management fee which may be earned by RMR for an annual period is calculated as follows:
◦ An amount, subject to a cap based on the value of our common shares outstanding, equal to 12 % of the product of:
• our equity market capitalization on the last trading day of the year immediately prior to the relevant three year measurement period, and
• the amount (expressed as a percentage) by which the total return per share, as defined in the business management agreement and further described below, of our common shareholders (i.e., share price appreciation plus dividends) exceeds the total shareholder return of the applicable market index, or the benchmark return per share, for the relevant measurement period. The MSCI U.S. REIT/Hotel & Resort REIT Index is the applicable benchmark index.
For purposes of the total return per share of our common shareholders, share price appreciation for a measurement period is determined by subtracting (1) the closing price of our common shares on Nasdaq on the last trading day of the year immediately before the first year of the applicable measurement period, or the initial share price, from (2) the average closing price of our common shares on the ten consecutive trading days having the highest average closing prices during the final 30 trading days in the last year of the measurement period.
◦ The calculation of the incentive management fee (including the determinations of our equity market capitalization, initial share price and the total return per share of our common shareholders) is subject to adjustments if we issue or repurchase our common shares, or if our common shares are forfeited, during the measurement period.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
◦ No incentive management fee is payable by us unless our total return per share during the measurement period is positive.
◦ The measurement periods are three year periods ending with the year for which the incentive management fee is being calculated.
◦ If our total return per share exceeds 12 % per year in any measurement period, the benchmark return per share is adjusted to be the lesser of the total shareholder return of the applicable market index for such measurement period and 12 % per year, or the adjusted benchmark return per share. In instances where the adjusted benchmark return per share applies, the incentive management fee will be reduced if our total return per share is between 200 basis points and 500 basis points below the applicable market index in any year, by a low return factor, as defined in the business management agreement, and there will be no incentive management fee paid if, in these instances, our total return per share is more than 500 basis points below the applicable market index in any year, determined on a cumulative basis (i.e., between 200 basis points and 500 basis points per year multiplied by the number of years in the measurement period and below the applicable market index).
◦ The incentive management fee is subject to a cap. The cap is equal to the value of the number of our common shares which would, after issuance, represent 1.5 % of the number of our common shares then outstanding multiplied by the average closing price of our common shares during the ten consecutive trading days having the highest average closing prices during the final 30 trading days of the relevant measurement period.
◦ Incentive management fees we paid to RMR for any period may be subject to “clawback” if our financial statements for that period are restated due to material non-compliance with any financial reporting requirements under the securities laws as a result of the bad faith, fraud, willful misconduct or gross negligence of RMR and the amount of the incentive management fee we paid was greater than the amount we would have paid based on the restated financial statements.
Business management fees are included in included in general and administrative expenses in our consolidated statements of comprehensive income (loss). We did not incur any incentive management fees pursuant to our business management agreement for the years ended December 31, 2024, 2023 or 2022.
• Property Management and Construction Supervision Fees. The property management fees payable to RMR by us for each applicable period are equal to 3.0 % of gross collected rents and the construction supervision fees payable to RMR by us for each applicable period are equal to 5.0 % of construction costs for our net lease portfolio, and the office building component of one of our hotels that are subject to our property management agreement with RMR. We and RMR include the properties we lease to TA in our property management agreement. The property management fees payable to RMR by us for the properties we lease to TA are equal to 1.0 % of gross collected rents for the 2024 calendar year, 2.0 % of gross collected rents for the 2025 calendar year and 3.0 % of gross collected rents for the 2026 calendar year and thereafter. Pursuant to our property management agreement with RMR, RMR oversees any major capital projects and repositioning activities at our hotels, including our hotels that are managed by Sonesta, as we may request from time to time. RMR receives the same fee previously paid to Sonesta for these services, which is equal to 3 % of the cost of any such major capital project or repositioning activity. Property management fees are included in other net lease operating expenses in our consolidated statements of comprehensive income (loss) and construction supervision fees are capitalized as building improvements in our consolidated balance sheets and are depreciated over the estimated useful lives of the related capital assets.
• Expense Reimbursement. We are generally responsible for all of our operating expenses, including certain expenses incurred or arranged by RMR on our behalf. We are generally not responsible for payment of RMR’s employment, office or administrative expenses incurred to provide management services to us, except for the employment and related expenses of RMR employees assigned to work exclusively or partly at our net lease properties and the office building component of one of our hotels, our share of the wages, benefits and other related costs of RMR’s centralized accounting personnel, our share of RMR’s costs for providing our internal audit function, and as otherwise agreed. Our property level operating expenses are generally incorporated into rents charged to our tenants, including certain payroll and related costs incurred by RMR which are included in net lease operating expenses and general and administrative expenses, as applicable, in our consolidated statements of comprehensive income (loss).
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
• Term. Our management agreements with RMR have terms that end on December 31, 2044, and automatically extend on December 31st of each year for an additional year, so that the terms of our management agreements thereafter end on the 20th anniversary of the date of the extension.
• Termination Rights . We have the right to terminate one or both of our management agreements with RMR: (i) at any time on 60 days’ written notice for convenience, (ii) immediately on written notice for cause, as defined therein, (iii) on written notice given within 60 days after the end of an applicable calendar year for a performance reason, as defined therein, and (iv) by written notice during the 12 months following a change of control of RMR, as defined therein. RMR has the right to terminate the management agreements for good reason, as defined therein.
• Termination Fee . If we terminate one or both of our management agreements with RMR for convenience, or if RMR terminates one or both of our management agreements for good reason, we have agreed to pay RMR a termination fee in an amount equal to the sum of the present values of the monthly future fees, as defined therein, for the terminated management agreement(s) for the term that was remaining prior to such termination, which, depending on the time of termination would be between 19 and 20 years. If we terminate one or both of our management agreements with RMR for a performance reason, we have agreed to pay RMR the termination fee calculated as described above, but assuming a ten year term was remaining prior to the termination. We are not required to pay any termination fee if we terminate our management agreements with RMR for cause or as a result of a change of control of RMR.
• Transition Services. RMR has agreed to provide certain transition services to us for 120 days following an applicable termination by us or notice of termination by RMR, including cooperating with us and using commercially reasonable efforts to facilitate the orderly transfer of the management and real estate investment services provided under our business management agreement and to facilitate the orderly transfer of the management of the managed properties under our property management agreement, as applicable.
• Vendors. Pursuant to our management agreements with RMR, RMR may from time to time negotiate on our behalf with certain third party vendors and suppliers for the procurement of goods and services to us. As part of this arrangement, we may enter agreements with RMR and other companies to which RMR or its subsidiaries provides management services for the purpose of obtaining more favorable terms from such vendors and suppliers.
• Investment Opportunities . Under our business management agreement with RMR, we acknowledge that RMR may engage in other activities or businesses and act as the manager to any other person or entity (including other REITs) even though such person or entity has investment policies and objectives similar to ours and we are not entitled to preferential treatment in receiving information, recommendations and other services from RMR.
In January 2025, in connection with a $ 100,000 credit agreement and related security agreement entered into by RMR and certain of its subsidiaries with Citibank, N.A., or Citibank, and the other lenders party thereto, we consented to the pledge and assignment of RMR’s interest in our management agreements under the security agreement. Pursuant to the consent, we agreed, among other things, that upon notice that an event of default under the RMR credit agreement has occurred and is continuing, we will continue to make all payments under our management agreements in accordance with the instructions of Citibank, and that if there is an event of default by RMR under our management agreements that would allow us to terminate or suspend our obligations, we will not terminate or suspend without notice to Citibank and provide Citibank 30 days to cure the default on RMR’s behalf. The consent was approved by our Independent Trustees.
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
For the years ended December 31, 2024, 2023 and 2022, the business management fees, property management fees and construction supervision fees recognized in our consolidated financial statements were as follows:
Year Ended December 31,
2024 2023 2022
Pursuant to business management agreement:
Net business management fees (1)
$ 29,653 $ 33,352 $ 35,495
Pursuant to property management agreement:
Property management fees $ 6,012 $ 3,702 $ 3,998
Construction supervision fees 5,958 4,666 2,130
$ 11,970 $ 8,368 $ 6,128
Expense reimbursement:
Property level expenses $ 4,445 $ 4,648 $ 3,258
(1) The net business management fees we recognized for each of the years ended December 31, 2024, 2023 and 2022 reflect a reduction of $ 3,585 for the amortization of the liability we recorded in connection with our former investment in RMR Inc.
Note 9. Related Person Transactions
We have relationships and historical and continuing transactions with TA, Sonesta, RMR, RMR Inc., and others related to them, including other companies to which RMR or its subsidiaries provide management services and some of which have trustees, directors or officers who are also our Trustees or officers. Following the TA Merger, TA ceased being a related party. RMR is a majority owned subsidiary of RMR Inc. The Chair of our Board of Trustees and one of our Managing Trustees, Adam Portnoy, is the sole trustee, an officer and the controlling shareholder of ABP Trust, which is the controlling shareholder of RMR Inc., and is chair of the board of directors and a managing director and the president and chief executive officer of RMR Inc. and an officer and employee of RMR. John Murray, our other Managing Trustee and our former President and Chief Executive Officer, also serves as an officer and employee of RMR and as president and chief executive officer of Sonesta. In addition, each of our other officers serves as an officer of RMR. Some of our Independent Trustees also serve as independent trustees of other public companies to which RMR or its subsidiaries provide management services. Adam Portnoy serves as chair of the boards and as a managing trustee of these public companies. Other officers of RMR, including Mr. Murray and certain of our officers, serve as managing trustees or officers of certain of these companies.
Our Manager, RMR . We have two agreements with RMR to provide management services to us. See Note 8 for further information regarding our management agreements with RMR.
Share Awards to RMR Employees. As described in Note 7, we award shares to our officers and other employees of RMR annually. Generally, one fifth of these awards vest on the award date and one fifth vests on each of the next four anniversaries of the award dates. In certain instances, we may accelerate the vesting of an award, such as in connection with the award holder’s retirement as an officer of us or an officer or employee of RMR. These awards to RMR employees are in addition to the share awards to our Managing Trustees, as Trustee compensation, and the fees we paid to RMR. See Note 7 for information regarding our share awards activity as well as certain share purchases we made in connection with share award recipients satisfying tax withholding obligations on the vesting of share awards.
TA . We lease 175 of our travel centers to TA under the TA leases. RMR provides management services to us and, until the TA Merger, provided services to TA, and Mr. Portnoy, until the TA Merger, also served as the chair of the board of directors and as a managing director of TA and, as of immediately prior to the TA Merger, beneficially owned 661,506 shares of TA common stock (including through RMR), representing approximately 4.4 % of TA’s outstanding shares of common stock.
See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with TA.
Sonesta . Sonesta is a private company of which Adam Portnoy, one of our Managing Trustees, is a director and the controlling stockholder. One of Sonesta’s other directors and president and chief executive officer is our other Managing Trustee and former President and Chief Executive Officer, and Sonesta’s other director serves as one of RMR Inc.’s managing directors, as RMR’s and RMR Inc.’s executive vice president, general counsel and secretary and as our Secretary. Certain other
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
officers and employees of Sonesta are former officers and employees of RMR. RMR also provides certain services to Sonesta. As of December 31, 2024, we owned 34 % of Sonesta’s outstanding shares of common stock and Sonesta managed 181 of our hotels. See Notes 4 and 5 for further information regarding our relationships, agreements and transactions with Sonesta.
Note 10. Income Taxes
Our provision (benefit) for income taxes consists of the following:
Year Ended December 31,
2024 2023 2022
Current:
Federal $ — $ — $ —
State 931 ( 106 ) 385
Foreign 1,105 503 233
2,036 397 618
Deferred:
Foreign ( 634 ) ( 1,895 ) ( 817 )
( 634 ) ( 1,895 ) ( 817 )
$ 1,402 $ ( 1,498 ) $ ( 199 )
A reconciliation of our effective tax rate and the current U.S. Federal statutory income tax rate is as follows:
Year Ended December 31,
2024 2023 2022
Taxes at statutory U.S. federal income tax rate 21.0 % 21.0 % 21.0 %
Nontaxable income of SVC ( 21.0 ) % ( 21.0 ) % ( 21.0 ) %
State and local income taxes, net of federal tax benefit ( 0.3 ) % 0.3 % ( 0.3 ) %
Foreign taxes ( 0.2 ) % ( 6.9 ) % 0.4 %
Foreign tax rate change 0.0 % 11.0 % 0.0 %
Effective tax rate ( 0.5 ) % 4.4 % 0.1 %
Deferred income tax balances generally reflect the net tax effects of temporary differences between the carrying amounts of certain of our assets and liabilities in our consolidated balance sheets and the amounts used for income tax purposes and are stated at enacted tax rates expected to be in effect when taxes are actually paid or recovered. In December 2023, our subsidiary which operates in Puerto Rico elected to be taxed as a corporation for purposes of Puerto Rico tax law. This election increased the entity’s tax rate in Puerto Rico from 29.0 % to 37.5 %. The result of this change is primarily offset by available tax concessions in Puerto Rico. Significant components of our deferred tax assets and liabilities are as follows:
As of December 31,
2024 2023
Deferred tax assets:
Tax loss carryforwards $ 140,665 $ 112,532
Other 12,782 7,973
Deferred tax assets 153,447 120,505
Valuation allowance ( 152,676 ) ( 120,505 )
Net deferred tax assets $ 771 $ —
Deferred tax liabilities:
Property basis difference $ ( 7,754 ) $ ( 7,970 )
Puerto Rico deferred tax gain ( 8,073 ) ( 8,162 )
Other ( 442 ) —
Net deferred tax liabilities $ ( 16,269 ) $ ( 16,132 )
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Net deferred tax liabilities are included in accounts payable and other liabilities in our consolidated balance sheets.
At December 31, 2024 and 2023, our consolidated TRS had a net deferred tax asset, prior to any valuation allowance, of $ 141,642 and $ 114,145 , respectively, which consists primarily of the tax benefit of net operating loss carryforwards and tax credits. Because of the uncertainty surrounding our ability to realize the future benefit, we have provided a 100 % valuation allowance against certain deferred tax assets as of December 31, 2024 and 2023. As of December 31, 2024 and 2023, our consolidated TRS had net operating loss carryforwards for federal income tax purposes of approximately $ 556,778 and $ 442,560 , respectively, which partially expire starting in 2027. At December 31, 2024 and 2023, we recorded a deferred tax liability of $ 8,073 and $ 8,162 , respectively, as a result of the book value to tax basis difference related to the accounting of an insurance settlement in 2021.
At December 31, 2024 and 2023, we, excluding our subsidiaries, had net operating loss carryforwards for federal income tax purposes of approximately $ 579,886 and $ 514,568 , respectively, of which certain losses incurred prior to 2018 partially expire starting in 2027.
Note 11. Concentration
Geographic Concentration
At December 31, 2024, our 948 properties were located in 46 states in the United States, plus the District of Columbia, Ontario, Canada and Puerto Rico. Between 5 % and 13 % of our properties, by investment, were located in each of California, Texas, Florida, Illinois and Georgia. Our two hotels in Ontario, Canada and our hotel in Puerto Rico represent 3.1 % of our hotels, by investment, in the aggregate at December 31, 2024.
Credit Concentration
As of December 31, 2024, Sonesta operated 181 of our hotels and TA leased 175 of our net lease properties, representing 50.0 % and 28.7 %, respectively, of our investment. See Notes 4 and 9 for a discussion of our Sonesta and TA agreements.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Note 12. Segment Information
Our operating segments are based on our internal reporting structure and property type and are aligned with how our CODM reviews the operating results to allocate resources and assess segment performance. The CODM is our President and Chief Investment Officer. Our two reportable segments are hotel investments and net lease investments. Our hotel investments segment consists of hotels managed by subsidiaries of Sonesta, Hyatt, Radisson and IHG. Our net lease investments segment consists of service-focused retail net lease properties, including travel centers leased to TA, our largest tenant.
The significant expense categories and amounts presented below align with the segment-level information that is regularly provided to our CODM. Our CODM reviews operating and financial results, including net income (loss) and its components, to allocate resources and assess segment performance. The accounting policies of our reportable segments are the same as those described in Note 2. The tables below present information about our segments.
Year Ended December 31, 2024
Hotels Net Lease Total
Revenues:
Hotel operating revenues $ 1,496,705 $ — $ 1,496,705
Rental income — 400,223 400,223
Total revenues 1,496,705 400,223 1,896,928
Less:
Labor and benefits (1)
557,126 3,865 560,991
Management fees 54,738 6,012 60,750
Real estate taxes and insurance 122,342 3,312 125,654
Other operating expenses (2)
539,947 6,628 546,575
Depreciation and amortization 221,299 150,487 371,786
Interest expense
— 46,231 46,231
Other segment items (3)
36,746 19,687 56,433
Segment (loss) profit
( 35,493 ) 164,001 128,508
Reconciliation of segment profit or loss:
General and administrative
( 40,239 )
Interest income
3,648
Interest expense ( 337,561 )
Loss on early extinguishment of debt, net ( 16,181 )
Income tax expense ( 1,402 )
Equity in losses of an investee ( 12,299 )
Net loss
$ ( 275,526 )
(1) Labor and benefits for our net lease investments segment include property level expense reimbursements as discussed in Note 8.
(2) Other operating expenses for each reportable segment include expenses such as repairs and maintenance, utilities and other costs incurred in connection with the operation of our properties.
(3) Other segment items for each reportable segment include transaction related costs, gains and losses on asset impairment and sale of real estate and interest income, as applicable.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Year Ended December 31, 2023
Hotels Net Lease Total
Revenues:
Hotel operating revenues $ 1,478,034 $ — $ 1,478,034
Rental income — 395,829 395,829
Total revenues 1,478,034 395,829 1,873,863
Less (plus):
Labor and benefits (1)
534,620 4,279 538,899
Management fees 54,192 3,702 57,894
Real estate taxes and insurance 109,287 3,465 112,752
Other operating expenses (2)
525,807 6,217 532,024
Depreciation and amortization 216,235 167,825 384,060
Interest expense
— 40,920 40,920
Other segment items (3)
( 42,003 ) 8,021 ( 33,982 )
Segment profit
79,896 161,400 241,296
Reconciliation of segment profit:
General and administrative
( 45,397 )
Transaction related costs
1,623
Gain on equity securities, net
48,837
Interest income
20,692
Interest expense ( 295,422 )
Loss on early extinguishment of debt
( 1,524 )
Income tax benefit
1,498
Equity in losses of an investee ( 4,382 )
Net loss
$ ( 32,779 )
(1) Labor and benefits for our net lease investments segment include property level expense reimbursements as discussed in Note 8.
(2) Other operating expenses for each reportable segment include expenses such as repairs and maintenance, utilities and other costs incurred in connection with the operation of our properties.
(3) Other segment items for each reportable segment include gains and losses on asset impairment and sale of real estate and interest income, as applicable.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Year Ended December 31, 2022
Hotels Net Lease Total
Revenues:
Hotel operating revenues $ 1,467,344 $ — $ 1,467,344
Rental income — 395,667 395,667
Total revenues 1,467,344 395,667 1,863,011
Less (plus):
Labor and benefits (1)
511,364 2,973 514,337
Management fees 53,385 3,998 57,383
Real estate taxes and insurance 121,733 2,398 124,131
Other operating expenses (2)
540,875 3,807 544,682
Depreciation and amortization 221,416 179,692 401,108
Other segment items (3)
( 37,689 ) 807 ( 36,882 )
Segment profit
56,260 201,992 258,252
Reconciliation of segment profit:
General and administrative
( 44,404 )
Transaction related costs
( 1,920 )
Loss on equity securities, net
( 8,104 )
Interest income
3,326
Interest expense ( 341,795 )
Loss on early extinguishment of debt
( 791 )
Income tax benefit
199
Equity in earnings of an investee
2,856
Net loss
$ ( 132,381 )
(1) Labor and benefits for our net lease investments segment include property level expense reimbursements as discussed in Note 8.
(2) Other operating expenses for each reportable segment include expenses such as repairs and maintenance, utilities and other costs incurred in connection with the operation of our properties.
(3) Other segment items for each reportable segment include gains and losses on asset impairment and sale of real estate and interest income, as applicable.
As of December 31,
2024 2023 2022
Assets:
Hotels $ 3,897,132 $ 3,943,213 $ 3,882,701
Net Lease 2,942,585 3,084,686 3,376,295
Corporate 279,841 328,217 229,195
Total assets $ 7,119,558 $ 7,356,116 $ 7,488,191
As of December 31,
2024 2023 2022
Capital expenditures:
Hotels $ 297,398 $ 232,053 $ 110,343
Net Lease 5,494 3,477 5,584
Total capital expenditures $ 302,892 $ 235,530 $ 115,927
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
Note 13. Fair Value of Assets and Liabilities
The table below presents certain of our assets carried at fair value at December 31, 2024, categorized by the level of inputs, as defined in the fair value hierarchy under GAAP, used in the valuation of each asset.
Fair Value at Reporting Date Using
Description Total Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2)
Significant Unobservable Inputs (Level 3)
Non-recurring Fair Value Measurement Assets:
Assets of properties held for sale (1)(2)
$ 14,664 $ — $ 13,382 $ 1,282
Assets of properties held and used (3)
$ 7,408 $ — $ — $ 7,408
(1) We recorded impairment charges totaling $ 13,641 during the year ended December 31, 2024, to reduce the carrying value of three hotels and two net lease properties in our consolidated balance sheet to their estimated fair value, less estimated costs to sell of $ 687 , based on negotiated sales prices with third party buyers (Level 2 inputs as defined in the fair value hierarchy under GAAP).
(2) We recorded impairment charges totaling $ 4,512 during the year ended December 31, 2024, to reduce the carrying value of one net lease property in our consolidated balance sheet to their estimated fair value, less estimated costs to sell of $ 68 , based on brokers’ opinion of values (Level 3 inputs as defined in the fair value hierarchy under GAAP).
(3) We recorded impairment charges totaling $ 4,285 during the year ended December 31, 2024, to reduce the carrying value of one net lease property in our consolidated balance sheet to its estimated fair value. We determined the estimated fair value of this property by discounting expected future cash flows based on prevailing market rents and including an exit capitalization rate to determine the final year of cash flows. Our assessment to determine the estimated fair value of this property used significant unobservable inputs (Level 3 inputs as defined in the fair value hierarchy under GAAP) including a discount rate of 7.0 % and an exit capitalization rate of 6.3 %.
In addition to the assets included in the table above, our financial instruments include our cash and cash equivalents, restricted cash, rents receivable, revolving credit facility, net lease mortgage notes, senior notes and security deposits. At December 31, 2024 and 2023, the fair values of these financial instruments approximated their carrying values in our consolidated balance sheets due to their short-term nature or floating interest rates, except as follows:
December 31, 2024 December 31, 2023
Carrying Fair Carrying Fair
Value (1)
Value Value (1)
Value
Senior Unsecured Notes, due 2025 at 4.50 %
$ — $ — $ 349,181 $ 341,688
Senior Unsecured Notes, due 2025 at 7.50 %
— — 796,007 808,888
Senior Unsecured Notes, due 2026 at 5.25 %
348,730 339,889 347,601 339,780
Senior Unsecured Notes, due 2026 at 4.75 %
448,957 425,237 448,347 419,909
Senior Unsecured Notes, due 2027 at 4.95 %
398,428 373,796 397,672 362,108
Senior Guaranteed Unsecured Notes, due 2027 at 5.50 %
446,758 420,809 445,631 412,002
Net Lease Mortgage Notes, due 2028 at 5.60 %
568,283 585,236 558,876 585,784
Senior Unsecured Notes, due 2028 at 3.95 %
396,505 335,056 395,355 327,708
Senior Guaranteed Unsecured Notes, due 2029 at 8.375 %
682,934 676,725 — —
Senior Unsecured Notes, due 2029 at 4.95 %
421,269 338,071 420,477 351,726
Senior Unsecured Notes, due 2030 at 4.375 %
394,189 301,752 393,056 310,524
Senior Secured Notes, due 2031 at 8.625 %
972,073 1,040,590 968,017 1,047,430
Senior Guaranteed Unsecured Notes, due 2032 at 8.875 %
482,577 462,755 — —
Total financial liabilities $ 5,560,703 $ 5,299,916 $ 5,520,220 $ 5,307,547
(1) Carrying value includes unamortized discounts, premiums and certain debt issuance costs.
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SERVICE PROPERTIES TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(dollars in thousands, except per share amounts)
At December 31, 2024 and 2023, we estimated the fair values of our senior notes using an average of the bid and ask price of our then outstanding issuances of senior notes (Level 2 inputs). At December 31, 2024 and 2023, we estimated the fair value of our net lease mortgage notes using discounted cash flow analyses and current prevailing market rates as of the measurement date (Level 3 inputs). As Level 3 inputs are unobservable, our estimated value may differ materially from the actual fair value.
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SERVICE PROPERTIES TRUST
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION
December 31, 2024
(dollars in millions)
Initial Cost to
Company Costs Capitalized
Subsequent to Acquisition Gross Amount at which Carried
at Close of Period
Property Count
Brand Encumbrances (1)
Land Building &
Improvements Improvements Impairment Cost Basis
Adjustment (2)
Land Building &
Improvements Total (3)
Accumulated
Depreciation (4)
Date of
Construction Date
Acquired
Hotel Properties
17 Royal Sonesta Hotels® (5)
$ — $ 229 $ 1,118 $ 445 $ ( 9 ) $ ( 17 ) $ 229 $ 1,537 $ 1,766 $ ( 476 ) 1912 through 2010 2001 through 2019
22 Sonesta Hotels & Resorts® (5)
— 216 641 479 ( 51 ) ( 17 ) 216 1,052 1,268 ( 339 ) 1950 through 2010 1998 through 2023
51 Sonesta ES Suites® (5)
— 115 502 417 ( 35 ) ( 71 ) 115 813 928 ( 407 ) 1985 through 2009 1996 through 2018
37 Sonesta Select® (5)
— 79 351 241 ( 4 ) ( 87 ) 79 501 580 ( 313 ) 1987 through 2000 1995 through 2001
46 Sonesta Simply Suites® (5)
— 61 304 142 ( 17 ) ( 38 ) 61 391 452 ( 211 ) 1997 through 2021 1997 through 2003
17 Hyatt Place® (5)
— 20 137 120 — ( 9 ) 20 248 268 ( 98 ) 1995 through 2002 1997 through 2002
5 Radisson® Hotels & Resorts — 9 93 59 — ( 2 ) 9 150 159 ( 83 ) 1987 through 1990 1996 through 1997
1 Crowne Plaza® — 17 69 32 — ( 1 ) 17 100 117 ( 21 ) 1986 2017
2 Country Inn & Suites® by Radisson — 3 24 11 — — 3 35 38 ( 21 ) 1989 1996
Net Lease Service Retail Properties
131 TravelCenters of America (6)
— 564 936 452 — ( 455 ) 564 933 1,497 ( 530 ) 1962 through 2017 2007 through 2017
44 Petro Stopping Centers (6)
— 260 522 195 — ( 243 ) 260 474 734 ( 255 ) 1975 through 2017 2008 through 2017
14 The Great Escape — 19 64 — — — 19 64 83 ( 12 ) 1986 through 2007 2019
3 Life Time Fitness — 17 56 — — — 17 56 73 ( 11 ) 1987 through 2012 2019
5 Buehler's Fresh Foods 52 10 49 — — — 10 49 59 ( 13 ) 1980 through 2000 2019
59 Heartland Dental — 11 37 1 — — 11 38 49 ( 8 ) 1920 through 2005 2019
10 Norms — 23 24 1 — — 23 25 48 ( 6 ) 1957 through 2014 2019
5 AMC Theatres — 13 34 1 — — 13 35 48 ( 8 ) 1995 through 2008 2019
23 Express Oil Change 37 6 37 — — — 6 37 43 ( 7 ) 1965 through 2001 2019
40 Pizza Hut 24 12 28 — — — 12 28 40 ( 15 ) 1915 through 2006 2019
3 Flying J Travel Plaza (5)
— 6 32 1 — — 6 33 39 ( 6 ) 2001 2019
9 Vacant — 22 20 5 ( 5 ) ( 5 ) 19 18 37 ( 4 ) 1977 through 2005 2007 through 2019
6 America's Auto Auction 27 7 23 6 — — 7 29 36 ( 6 ) 1960 through 2005 2019
4 Courthouse Athletic Club 20 5 28 — — — 5 28 33 ( 6 ) 1980 through 2001 2019
2 Big Al's 17 3 28 — — — 3 28 31 ( 4 ) 2006 through 2010 2019
4 B&B Theatres — 12 15 3 — — 12 18 30 ( 5 ) 1998 through 2004 2019
1 Fleet Farm — 3 28 — — — 3 28 31 ( 5 ) 1979 2019
16 Martin's 21 7 21 — — ( 1 ) 7 20 27 ( 5 ) 1962 through 2003 2019
19 Arby's 18 7 19 — — — 7 19 26 ( 8 ) 1967 through 2005 2019
17 Burger King 18 5 21 — — — 5 21 26 ( 7 ) 1979 through 2000 2019
S-1
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SERVICE PROPERTIES TRUST
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2024
(dollars in millions)
Initial Cost to
Company Costs Capitalized
Subsequent to Acquisition Gross Amount at which Carried
at Close of Period
Property Count
Brand Encumbrances (1)
Land Building &
Improvements Improvements Impairment Cost Basis
Adjustment (2)
Land Building &
Improvements Total (3)
Accumulated
Depreciation (4)
Date of
Construction Date
Acquired
5 Regal Cinemas — 5 21 — — — 5 21 26 ( 5 ) 2005 through 2010 2019
20 Popeye's Chicken & Biscuits 21 8 17 — — — 8 17 25 ( 6 ) 1968 through 2003 2019
4 Crème de la Crème 19 7 18 — — — 7 18 25 ( 3 ) 1999 through 2003 2019
32 Church's Chicken — 5 18 — — — 5 18 23 ( 5 ) 1968 through 1983 2019
15 Hardee's 16 4 18 — — — 4 18 22 ( 6 ) 1977 through 1997 2019
5 Mister Car Wash 20 2 19 1 — — 2 20 22 ( 3 ) 1960 through 2005 2019
6 United Supermarkets 16 4 17 — — — 4 17 21 ( 6 ) 1979 through 1997 2019
2 Mesa Fitness 14 3 17 — — — 3 17 20 ( 3 ) 1983 through 2007 2019
13 Taco Bell 14 4 15 — — — 4 15 19 ( 4 ) 1982 through 2019 2019 through 2020
28 Uncle Ed's Oil Shoppe — 6 12 — — — 6 12 18 ( 5 ) 1959 through 1999 2019
1 CarMax — 5 13 — — — 5 13 18 ( 2 ) 2005 2019
1 Multi-Tenant — 2 19 5 ( 9 ) ( 1 ) 2 14 16 ( 4 ) 1986 through 2001 2019
2 Fusion Gyms — 3 10 2 — — 3 12 15 ( 2 ) 1987 through 1994 2019
5 Pike Nursery 16 8 6 — — — 8 6 14 ( 2 ) 1970 through 1996 2019
1 Dave & Buster's 12 3 11 — — — 3 11 14 ( 2 ) 1972 2019
2 HHI-Formtech 9 3 10 — — — 3 10 13 ( 5 ) 1952 2019
3 Golden Corral — 4 8 — — ( 1 ) 4 7 11 ( 2 ) 1989 through 2000 2019
2 Sanford's Grub & Pub — 1 10 — — — 1 10 11 ( 2 ) 1928 through 2003 2019
5 Fuddruckers — 4 6 — — — 4 6 10 ( 2 ) 1994 through 1995 2019
4 Rite Aid — 3 7 — — — 3 7 10 ( 2 ) 1993 through 2000 2019
4 Texas Roadhouse 6 7 6 — — ( 3 ) 7 3 10 ( 1 ) 1992 through 2003 2019
2 Eddie Merlot's 6 2 8 — — — 2 8 10 ( 2 ) 2001 through 2003 2019
1 Baptist Emergency Hospital 10 2 8 — — — 2 8 10 ( 1 ) 2013 2019
12 Core & Main 4 4 5 — — — 4 5 9 ( 2 ) 1972 through 1998 2019
5 Lerner and Rowe 9 1 8 — — — 1 8 9 ( 1 ) 1970 through 2007 2019
4 Meineke Car Care Center — 3 6 — — — 3 6 9 ( 1 ) 1999 through 2000 2019
1 Cermak Fresh Market 6 2 7 — — — 2 7 9 ( 4 ) 1989 2019
1 Columbus Preparatory Academy 6 1 8 — — — 1 8 9 ( 1 ) 2004 2019
1 Academy Sports + Outdoors 5 1 6 — — — 1 6 7 ( 1 ) 2016 2019
1 Austin's Park n' Pizza 5 — 8 — — — — 8 8 ( 2 ) 2003 2019
1 Kohl's 5 2 6 — — — 2 6 8 ( 2 ) 1986 2019
1 LA Fitness — 1 7 — — — 1 7 8 ( 1 ) 2012 2019
9 Sonic Drive-In 7 3 4 — — — 3 4 7 ( 2 ) 1991 through 2018 2019
3 Krispy Kreme 7 2 5 — — — 2 5 7 ( 1 ) 2000 through 2004 2019
3 Oregano's Pizza Bistro 5 1 6 — — — 1 6 7 ( 2 ) 1964 through 2006 2019
2 Blue Rhino 15 3 4 — — — 3 4 7 ( 1 ) 2004 2019
2 Diagnostic Health — 1 6 — — — 1 6 7 ( 1 ) 1985 through 1997 2019
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SERVICE PROPERTIES TRUST
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2024
(dollars in millions)
Initial Cost to
Company Costs Capitalized
Subsequent to Acquisition Gross Amount at which Carried
at Close of Period
Property Count
Brand Encumbrances (1)
Land Building &
Improvements Improvements Impairment Cost Basis
Adjustment (2)
Land Building &
Improvements Total (3)
Accumulated
Depreciation (4)
Date of
Construction Date
Acquired
1 Marcus Theaters — 2 5 — — — 2 5 7 ( 2 ) 1999 2019
7 Hughes Supply 3 2 4 — — — 2 4 6 ( 1 ) 1976 through 1993 2019
5 Brookshire Brothers 5 1 5 — — — 1 5 6 ( 2 ) 1992 through 1999 2019
3 Jack's Family Restaurant 4 2 4 — — — 2 4 6 ( 1 ) 2008 through 2016 2019
3 Wendy's 6 1 5 — — — 1 5 6 ( 1 ) 1984 through 1996 2019
2 Flying Star Cafe 4 1 5 — — — 1 5 6 ( 1 ) 1994 through 1999 2019
1 Jack Stack Barbeque 4 1 5 — — — 1 5 6 ( 1 ) 1983 2019
2 10 Box 4 2 3 — — — 2 3 5 ( 1 ) 1994 2019
2 Bricktown Brewery 4 1 4 — — — 1 4 5 ( 2 ) 1904 through 1984 2019
2 Gerber Collision & Glass 4 1 4 — — — 1 4 5 ( 1 ) 2001 through 2002 2019
2 HD Supply White Cap 3 2 3 — — — 2 3 5 ( 1 ) 1990 through 2001 2019
2 Walgreens 3 — 5 — — — — 5 5 ( 1 ) 1993 through 1999 2019
1 Angstrom 5 2 3 — — — 2 3 5 ( 2 ) 1987 2019
1 Mak Pack 3 1 4 — — — 1 4 5 ( 1 ) 2007 2019
1 Planet Fitness 4 1 4 — — — 1 4 5 ( 1 ) 2007 2019
1 RGB Eye Associates 5 1 4 — — — 1 4 5 ( 1 ) 2013 2019
1 Sportsman's Warehouse 3 1 3 1 — — 1 4 5 ( 2 ) 1983 2019
2 Famous Dave's 3 1 3 — — — 1 3 4 ( 1 ) 1997 through 1999 2019
2 Focus Child Development Center — 1 3 — — — 1 3 4 — 1996 through 1998 2019
1 Ashley Furniture 2 1 3 — — — 1 3 4 ( 1 ) 2000 2019
1 Boozman-Hof — 2 2 — — — 2 2 4 — 1988 2019
1 Eriks Bike Shop — 1 3 — — — 1 3 4 ( 1 ) 1996 2019
1 Miller Waste Mills — — 4 — — — — 4 4 ( 2 ) 1960 2019
1 Mind 24-7 — 1 3 2 ( 3 ) — 1 2 3 — 2008 2019
1 Rainbow Kids Clinic 3 1 3 — — — 1 3 4 — 2011 2019
1 Win Win — 1 3 — — — 1 3 4 ( 1 ) 1990 2019
2 Anixter 2 1 2 — — — 1 2 3 ( 1 ) 1984 through 1999 2019
2 Monterey's Tex Mex 1 1 2 — — — 1 2 3 ( 1 ) 1979 through 1997 2019
1 Applebee's — 1 2 — — — 1 2 3 ( 1 ) 1996 2019
1 Axels — — 3 — — — — 3 3 ( 1 ) 1995 2019
1 Black Angus Steakhouse 2 1 2 — — — 1 2 3 — 1996 2019
1 Buffalo Wild Wings 2 1 2 — — — 1 2 3 — 2014 2019
1 Heytex USA — — 2 — — — — 2 2 ( 1 ) 1967 2019
1 Kerry's Car Care 2 1 2 — — — 1 2 3 — 2015 2019
1 Nacarato Trucks — — 2 — — — — 2 2 ( 1 ) 1985 2019
1 Ojos Locos Sports Cantina 2 1 2 — — — 1 2 3 ( 1 ) 1993 2019
1 Slim Chickens 2 1 2 — — — 1 2 3 — 2014 2019
1 Southwest Stainless, LP 2 — 3 — — — — 3 3 ( 1 ) 1984 2019
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SERVICE PROPERTIES TRUST
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2024
(dollars in millions)
Initial Cost to
Company Costs Capitalized
Subsequent to Acquisition Gross Amount at which Carried
at Close of Period
Property Count
Brand Encumbrances (1)
Land Building &
Improvements Improvements Impairment Cost Basis
Adjustment (2)
Land Building &
Improvements Total (3)
Accumulated
Depreciation (4)
Date of
Construction Date
Acquired
1 Spoons Place — 1 2 — — — 1 2 3 — 1996 2019
1 Tractor Supply — — 3 — — — — 3 3 — 2007 2019
1 What the Buck — — 3 — — — — 3 3 ( 1 ) 1958 2019
2 Affordable Care, Inc. — 1 1 — — — 1 1 2 — 2008 through 2010 2019
2 Dollar General 1 — 2 — — — — 2 2 — 2015 2019
2 Hooters 4 1 1 — — — 1 1 2 ( 1 ) 1977 through 1994 2019
2 Rally's 1 1 1 — — — 1 1 2 — 1992 2019
2 Taco Bueno 2 1 1 — — — 1 1 2 ( 1 ) 1991 through 2003 2019
1 Bridgestone Tire 2 1 1 — — — 1 1 2 — 1998 2019
1 Cycle Gear 1 1 1 — — — 1 1 2 ( 1 ) 1989 2019
1 Long John Silver's 1 1 1 — — — 1 1 2 — 1987 2019
1 Moe's American Grill — — 2 — — — — 2 2 ( 1 ) 1953 2019
1 Orscheln Farm and Home 2 1 1 — — — 1 1 2 — 1977 2019
1 Red Robin Gourmet Burgers — 1 1 — — — 1 1 2 — 1995 2019
1 Schumacher Homes 1 1 1 — — — 1 1 2 — 2014 2019
1 Bru Burger Bar 1 — 1 — — — — 1 1 — 1996 2019
1 Buchheit 1 — 1 — — — — 1 1 — 1986 2019
1 Captain Ds 1 — 1 — — — — 1 1 — 1995 2019
1 Chicken Salad Chick 1 — 1 — — — — 1 1 — 1976 2019
1 Clean Express Auto Wash — — 1 — — — — 1 1 ( 1 ) 1991 2019
1 Discount Tire — 1 4 — — ( 4 ) 1 — 1 — 2009 2019
1 Dunkin Donuts — — — — — — — — — — 1977 2019
1 El Forastero 1 — 1 — — — — 1 1 — 1985 2019
1 Howlin Concrete 1 1 — — — — 1 — 1 — 1922 2019
1 KFC 1 — 1 — — — — 1 1 — 2002 2019
1 Little Caesars — — 1 — — — — 1 1 — 1996 2019
1 NAPA Auto Parts 1 — 1 — — — — 1 1 — 2001 2019
1 O'Reilly Auto Parts 1 — 1 — — — — 1 1 — 2006 2019
1 Old Mexico Cantina 1 — 1 — — — — 1 1 — 2007 2019
1 Robata — — 1 — — — — 1 1 — 1980 2019
1 SRS Distribution 1 — 1 — — — — 1 1 — 1975 2019
1 The Atlanta Center for Foot & Ankle Surgery 2 — 1 — — — — 1 1 — 1963 2019
1 Touchstone Imaging 1 — 1 — — — — 1 1 — 1992 2019
1 Wings, Etc 1 — 1 — — — — 1 1 — 2014 2019
1 Bigham Cable — — — — — — — — — — 1989 2019
1 Consolidated Pipe — — — — — — — — — — 1987 2019
1 Del Taco 1 — — — — — — — — — N/A 2019
1 Family Dollar Stores — — — — — — — — — — 1988 2019
S-4
Table of Contents
SERVICE PROPERTIES TRUST
SCHEDULE III—REAL ESTATE AND ACCUMULATED DEPRECIATION (Continued)
December 31, 2024
(dollars in millions)
Initial Cost to
Company Costs Capitalized
Subsequent to Acquisition Gross Amount at which Carried
at Close of Period
Property Count
Brand Encumbrances (1)
Land Building &
Improvements Improvements Impairment Cost Basis
Adjustment (2)
Land Building &
Improvements Total (3)
Accumulated
Depreciation (4)
Date of
Construction Date
Acquired
1 Giliberto's Mexican Taco Shop 1 — — — — — — — — — N/A 2019
1 Off the Hook Seafood & More — — — — — — — — — — 2007 2019
1 Scooters Coffee 1 — — — — — — — — — 1972 2019
1 Sharks Fish & Chicken — — — — — — — — — — 1985 2019
931 Total Held and Used $ 607 $ 1,933 $ 5,806 $ 2,622 $ ( 133 ) $ ( 955 ) $ 1,930 $ 7,343 $ 9,273 $ ( 3,029 )
Assets Held for Sale
2 Sonesta Simply Suites® (5)
$ — $ 2 $ 13 $ — $ — $ — $ 2 $ 13 $ 15 $ ( 7 ) 1997 through 2021 1997 through 2003
1 Sonesta ES Suites® (5)
— 1 7 — — — 1 7 8 ( 4 ) 1985 through 2009 1996 through 2018
5 Sonesta Select® (5)
— 6 56 — — — 6 56 62 ( 36 ) 1987 through 2000 1995 through 2001
9 Vacant — 3 14 — ( 9 ) ( 2 ) 1 5 6 ( 2 ) 1977 through 2005 2007 through 2019
948 Total Including Held for Sale $ 607 $ 1,945 $ 5,896 $ 2,622 $ ( 142 ) $ ( 957 ) $ 1,940 $ 7,424 $ 9,364 $ ( 3,078 )
(1) Represents the principal balance of our net lease mortgage debt, excluding unamortized discounts and debt issuance costs.
(2) Represents reclassifications between accumulated depreciation and building & improvements made to record certain properties at fair value in accordance with GAAP.
(3) Excludes $ 341 of personal property classified in our consolidated balance sheets as furniture, fixtures and equipment.
(4) We depreciate buildings and improvements over periods ranging between ten to 40 years.
(5) 69 properties, including 66 hotels and three net lease properties secure our credit agreement, which has $ 150.0 million outstanding as of December 31, 2024.
(6) 67 TravelCenters of America and three Petro Stopping Centers properties secure our $ 1.0 billion senior secured notes due 2031, excluding unamortized discounts and debt issuance costs.
S-5
Table of Contents
SERVICE PROPERTIES TRUST
NOTES TO SCHEDULE III
December 31, 2024
(dollars in thousands)
(A) The change in total cost of properties for the period from January 1, 2022 to December 31, 2024 is as follows:
2024 2023 2022
Balance at beginning of year $ 9,415,896 $ 9,174,451 $ 9,790,010
Additions: acquisitions and capital expenditures 278,797 363,601 106,588
Dispositions ( 336,703 ) ( 110,535 ) ( 624,057 )
Reclassification of properties held for sale ( 85,367 ) ( 11,621 ) ( 98,090 )
Balance at close of year $ 9,272,623 $ 9,415,896 $ 9,174,451
(B) The change in accumulated depreciation for the period from January 1, 2022 to December 31, 2024 is as follows:
2024 2023 2022
Balance at beginning of year $ 2,950,685 $ 2,749,862 $ 3,069,348
Additions: depreciation expense 211,106 207,641 309,606
Dispositions ( 87,208 ) ( 4,747 ) ( 618,132 )
Reclassification of properties held for sale ( 45,539 ) ( 2,071 ) ( 10,960 )
Balance at close of year $ 3,029,044 $ 2,950,685 $ 2,749,862
(C) The aggregate cost tax basis for federal income tax purposes of our real estate properties was $ 6,520,266 on December 31, 2024.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Service Properties Trust
By: /s/ Todd W. Hargreaves
Todd W. Hargreaves
President and Chief Investment Officer
Dated: February 26, 2025
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature Title Date
/s/ Todd W. Hargreaves President and Chief Investment Officer February 26, 2025
Todd W. Hargreaves
/s/ Brian E. Donley Chief Financial Officer and Treasurer
(Principal Financial and Accounting Officer) February 26, 2025
Brian E. Donley
/s/ Laurie B. Burns Independent Trustee February 26, 2025
Laurie B. Burns
/s/ Robert E. Cramer Independent Trustee February 26, 2025
Robert E. Cramer
/s/ Donna D. Fraiche Independent Trustee February 26, 2025
Donna D. Fraiche
/s/ John L. Harrington Independent Trustee February 26, 2025
John L. Harrington
/s/ William A. Lamkin Independent Trustee February 26, 2025
William A. Lamkin
/s/ John G. Murray Managing Trustee February 26, 2025
John G. Murray
/s/ Rajan C. Penkar Independent Trustee February 26, 2025
Rajan C. Penkar
/s/ Adam D. Portnoy Managing Trustee February 26, 2025
Adam D. Portnoy